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Non-business expenses and not reporting BIKs

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I work for an SME, owned fully by a parent company, and I am struggling with a legal/moral quandary. 

Our MD (an employee - not a shareholder) is claiming expenses I suspect are personal. Things like his lunch every day at the office from the local supermarket, meals during the day when he is out with a colleague (a close “mate” of his) etc, which I know for a fact, but when the claims come in, they are tagged as supplier/customer entertaining. This colleague also has a company car which I have been pressured not to report as a benefit in kind on his P11D (tax of £2000 a year not being paid). 

This has been going on a long time and I have just really twigged, but if anyone came in and audited the books there would be no hard evidence that he is lying on his claims - only my knowledge. 

I wouldn’t be bothered if he was the owner, although these expenses run into the £000s per month, and this is effectively defrauding the tax man and the shareholders, for his own personal benefit. He has nobody above him in the business to approve any claims, just his submissions to me which I am told to pay  

I’m by no means a snitch but I have a responsibility to the shareholders to make sure the accounts are reported properly. Maybe it’s an obvious question - but I value my job - how would I go about trying to report this to the parent company without fearing the MD will get rid of me (less than 2 years service)? Would this count as whistleblowing if I had no hard evidence these expenses were personal, even though I know for a fact they are?


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14th Aug 2019 23:21

Are you a member of a professional body? Read their code of ethics, particularly the section regarding accountants in business.

Also, I'm confused about your point stating no hard evidence in the event of an audit. What about the company car?

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to the_drookit_dug
15th Aug 2019 07:33

The issue is the pressure not to report it as a BIK - nothing in writing. Just my word against theirs, my “competence” for not reporting it. And if I did I’d potentially just get the boot in exchange for someone who will do what they ask.

I am a member of a professional body, I’ll look into their code of ethics.

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to ApplesAndBananas
15th Aug 2019 08:49

Well, assuming the BIK ought to be reported and isn't, there are only two likely reasons. One is that you are incompetent and don't report things correctly, the other is that you know what should be reported but have been prevented from doing so.

If you are the one reporting the problem, it will be hard for anyone to argue the first. If, however, you wait for a third party to discover it, you're leaving yourself open.

It doesn't sound, from the information you've provided so far, that the MD would have the slightest hesitation in throwing you under a bus.

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to Duggimon
15th Aug 2019 09:10

I see no easy option here - you may want to call your professional body for a chat.

It's only August - the company is only facing a £100 fine for the late P11d.

Moral courage is required here - the MD needs to know that his preferred option, tax evasion, is illegal.

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15th Aug 2019 07:59

Could you discuss it with the FD/FC of the parent? Even as 'whats group policy on expenses/entertainment/cars? I just want to be sure we're consistent and don't find problems at audit?'

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By jcace
15th Aug 2019 11:58

Arm yourself fully with company car rules i.e. when a benefit arises and when a car can be treated as a pool car.
Likewise, make sure you are aware of the rules regarding entertainment, staff entertainment etc, so that when any arguments come back to you, you are in a strong position to advise the correct treatment.
And see WhichTyler's advice.

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15th Aug 2019 12:15

Document the facts, send the email to the MD, spelling it out. You do need a trail to cover yourself so that the MD can be seen to be the instigator of this, not you.

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to Red Leader
15th Aug 2019 16:32

This is what you do.

People like that will blame you when it goes wrong, so make sure you have documented (via an email, and Bcc your own private account so you have a record of it) your raising these concerns.

I find with client when you say something like "did you just ask me to drafud the tax man?" they back off sharpish, then again its a different relationship when they are the boss and you are the employee.

If you have the balls, you could do something pointed such as saying "I don't feel I can assist you in committing fraudulent behaviour so I would like you to take on tasks ABC" Dont of course expect a medal!

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