Many employees’ expense claims are becoming more unusual

By A.W. | WASHINGTON, DC

LET’S FACE it: the most boring part of travelling for business is filling in the paperwork afterwards to claim expenses back from an employer. Certify, a firm that makes expenses-management software, regularly assesses the millions of receipts entered into its system for that purpose. The firms where employees spend the most money should be no surprise. The world’s biggest carriers, Delta and American, are at the top of the list of airlines, for instance. But the volume and frequency of more unusual items claimed on expenses is growing.

The list of the stranger items claimed in the past few years, published by Certify on December 18th, included a human skull (which was approved for a medical experiment), an extra hotel room costing $85 to store garlic samples because the salesman could not stand the smell (rejected) and a hang glider costing $2,000 to “avoid a divorce”. (That was approved, although Gulliver is unable to confirm whether it managed to save the marriage.) This year another employee made a claim for a six-month subscription to Tinder Gold, a dating app, on the basis that they were doing research on the online-dating industry.

Whether or not a claim is accepted obviously depends on circumstances. A request for $10,000 in hotel bills and flight changes might have passed muster at some companies—except that one request was “due to missed flight while in jail”, according to the company’s finance director. It was rejected. Meanwhile, milk delivery costing $150 was approved at another, because a nursing mother was on a business trip and needed to send breast milk to her baby.

Yet some tax authorities are increasingly suspicious about the merits of some claims. In the 1960s and 1970s, when income and corporation tax rates were high, many executives had low cash salaries. But they received generous benefits, such as a chauffeur-driven Rolls-Royce or dinners at luxury restaurants, since salary received in the form of perks was not taxable. The lowering of tax rates around the world in the 1980s and 1990s reduced the need for this wheeze, helping to explain why headline executive pay has soared in recent decades. But expense claims are rising again: Britain’s tax authorities say the amount of money offset by employees to cover business expenses grew 25% in the five years to 2015. In December 2017 it launched a consultation looking at how the rules on what can be claimed as expenses could be tightened up. The largesse may not last.