In simple- yes. You need to keep copies of receipts for a period of up to seven years. It is important to keep a record that supports all your claims.

It is you and not your Umbrella Company who are liable if you underpay any tax. Different Umbrella Companies have different policies on expenses, but the bottom line is that all expenses must be ‘wholly and exclusively incurred in the performance of the duties of the employment’. Some Umbrella Companies may mislead contractors with claims that their Dispensation enables contractors to claim for more than they have spent. If you claim more than you have spent (e.g. you claim £10 on lunch that cost £5), the expense you have claimed is viewed by the HMRC as a financial benefit and you will be liable for the tax on it.

It is worth noting that HMRC do investigate at random and no company can offer you protection against an investigation. Some companies have tax enquiry insurance which offers some reassurance from the associated legal and consultancy fees of an investigation.