There is no shortage of literature on the reimbursement of expenses to employees and yet this area is a constant source of problems in Revenue Reviews. Regardless of what scheme is being implemented – e.g. Country Money, Hauliers Scheme or some scheme based on the Civil Service model – there are clear guidelines as to how the schemes should be operated and what records must be kept.
It is safe to assume that any variance from these guidelines – without advance approval from the Revenue – may generate problems if subsequently reviewed by the Revenue, for example during the course of a Revenue Audit.
It is important that practitioners ensure that any client seeking to implement an Expense Scheme based on the Civil Service rates is aware of the information leaflets issued by the Revenue Commissions – i.e. IT51 which deals with mileage and IT54 which covers Subsistence – copies can be downloaded by click on the links supplied.
When dealing with clients who are operating some form of expense scheme, it is important that accountants make it clear to their client that they have not reviewed the scheme to ensure that it is being operated correctly. Otherwise the client may well seek to apportion blame should problems subsequently arise in a Revenue Audit.
At the same time, accountants should ensure that their staff are familiar with the danger signs that something could be amiss when preparing the accounts, e.g. mileage being paid to directors who have company cars, or if the expenses are the same amount every month. There may be a plausible explanation for these items but clarification should be sought. Remember ‘round sum’ expense payments are almost never acceptable to the Revenue.
It may help to provide your clients with a sample expense sheet which you have drafted to ensure it meets the requirements as set down my the Revenue. The enclosed Sample Monthly Expense Sheet may be of assistance. Often, the current rates are printed on the reverse of the page but this is optional as some employers pay rates lower than the Civil Service rates.
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