Expense reimbursement without receipts: can I claim?

There are two reasons why companies ask their employees to provide receipts for their business expenses.

The first is for financial control. If you are a business owner, planning to reimburse an employee for a commercial expense, you need to be able to validate the purchase, to ensure that the cost was genuinely incurred. By providing the original receipt it also means that the specific expense can only be claimed once.

Whilst employee fraud is not a comfortable issue to consider, it's a real problem calling for appropriate levels of control.

Secondly, further down the line, when reporting to His Majesty's Revenue and Customs (HMRC) it's important to have your receipts available for examination by the tax authorities, if required. Whilst examination of receipts is rare, it's naïve not to retain these records, as the HMRC penalties can be significant.

Do I need to keep business receipts?

In short, yes.

Receipts are the most reliable method of demonstrating that your business incurred legitimate costs, and reimbursing expenses without receipts is generally discouraged for tax and compliance reasons. There are other methods of verifying purchases, such as contracts and invoice documents, but receipts are normally the easiest and most sustainable method of capturing and retaining the evidence you need. To support a claim, your records should include the key details of the transaction, such as the date, amount, supplier, and other information that serves as proof of purchase.

For tax purposes, that documentation must meet record-keeping requirements, and invoices can also count as valid proof of purchase. In practice, every claim should have enough evidence to support a tax deduction, so businesses should keep receipts throughout the year - though best practice is to keep business expense receipts for at least three years. These can be stored digitally.

What's the problem with paper receipts?

The problem with paper receipts - particularly those for personal expenses - is that they end up in the hands of a wide number of your employees, and the risk of them becoming lost or misplaced is high.

This presents an issue for your employee, who will find it difficult to be reimbursed without a receipt. It's also tricky for you as a business owner because, even though you may choose to repay your employee without a supporting receipt, you in turn do not have a receipt to place on your records for HMRC purposes.

Remember, it's the payment record that's important not the paper

It's easy to become fixated by the paperwork, especially when paper receipts are often the first thing missing when employees need to get reimbursed. Your accounting records can be backed by digital evidence of the payments, rather than a bag of paper receipts.

Time is the enemy of record keeping. So, the sooner the key details of a purchase are captured and digitised, the better. The best way to keep track is in one system with information that can include the date, amount, business use, and each transaction tied to a card record, ideally through an expense management app to track business expenses efficiently. Many organisations enforce a no receipt, no reimbursement rule, though some make exceptions below a set limit with management approval for tax purposes.

When a receipt cannot be recovered, staff may need a formal Missing Receipt Declaration plus supporting documentation such as a credit card or bank statement. Clear policies and tools that help prevent expense fraud and inappropriate claims are essential, and HMRC may accept a claim without a receipt if alternative documentation is provided, but personal expenses will still be rejected regardless of documentation.

Expense management tools such as Expend's mobile app enable employees to photograph paper receipts at the moment of spend. The data is digitally processed, helping track expenses and claims management from the moment of purchase, and users can follow video guides on using the Expend mobile app to get the most from these features.

So, valuable purchase data is not lost, and as a business owner, you have a complete, accurate and real time record of expenses, satisfying your reporting responsibilities. This is best for keeping track later, even though VAT reclaims may still need the right invoice.

What are the benefits of an expense management app for my employees?

Expense management apps provide ease and convenience for your employees. In a few seconds they can digitally capture and submit an expense for company mileage, personal expenses or company purchases.

Employees can save themselves the time and effort required to retain the receipt, complete a personal expenses form, and wait for their claim to be reimbursed. The risk of lost receipts disappears and your company spend record is complete and controlled. In the UK, failing to comply with proof requirements risks prosecution.

Expense management apps integrate with company accounting software such as Xero and QuickBooks, meaning that expenses are automatically processed onto your company accounts, with the reimbursement process being equally seamless when using business expense management software that connects to your accounting tools.

These are just a few of the reasons why companies are adopting expense management apps for their employees, significantly reducing how much time is spent on manual expense claims processing.

Disclaimer: This is not legal, accounting, or tax advice - it's simply a guide. If you need help, check with your accountant or contact HMRC directly.