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UK businesses risk severe tax and vat penalties as new legislation comes into play
The lot of the finance director today is not an easy one - they are expected to balance business effectiveness with financial prudence and participate in strategic planning that contributes to the successful growth of the business. The stark reality is that most finance departments spend the majority of their time bogged down in administrative tasks that do not necessarily deliver incremental value to the business, such as travel and expense management.
And the situation is set to worsen as new legislation comes into force in April 2003.
Already one in five UK businesses with a turnover of more than £1million may be sitting on a mountain of unpaid taxes, [Source Continental Research]. But it will get worse as these imminent legislative changes, such as the 1% increase in National Insurance contributions, will increase the workload of handling daily travel and expense claims, while the rising value of recovery to the Inland Revenue is increasing the diligence of Government auditing agencies so that companies are more likely to fall foul of tax and VAT auditors.
Ashley Whittaker, Founding Director of GlobalExpense, provider of outsourced expense management services, comments, "Currently, six out of every ten calls in to the finance department are from employees chasing their expenses claims. Combine this with the increasing legislative complexity surrounding tax and VAT, and the burden to any organisation for what, after all, should be a background task only gets worse."
He continues, "Finance Directors should be focusing on core activities such as business reporting and analysis. And as most departments simply do not have the time and resource to keep their knowledge and systems up to date with rapidly changing legislation, they are sitting on a tax time bomb! The most cost-effective way to ensure compliance - and to avoid putting the business at risk of huge tax penalties - is to outsource non-core functions such as travel and expense management."
In order to enable finance departments to address these issues and focus on the core function of running their business in a way that minimises cost, GlobalExpense offers UK and European organisations an outsourced travel and expense management solution.
GlobalExpense takes away the pain of dealing with the administrative burden of travel and expense management, frees up resource within the finance department which can be redeployed elsewhere - such as gathering and analysing data to improve business decision making - and adds to the bottom line by maximising tax reclaims.
Furthermore, the benefits will be felt across the business as employees see their expenses claims handled and processed on a daily basis. Line managers only have to answer exceptional queries rather than manage an onerous expense approval process, and company directors start to see a finance function which really does add value.
Whittaker concludes, "Let's face it - doing expenses is hardly the most inspiring job in the world. So get rid of it - the finance team can spend more time on the job spec they accepted, the one that they do best, and the business can save money by doing nothing!"
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