The real issue is with the local (European) company when they claim the expense against profits and the tax inspector turns their nose up at the invoice/receipt.

Being in the UK, we tend to work on a system where things are taken in context and you can defend such decisions. Maybe other tax regimes are more restrictive, but the British way is always that you can have a debate with authorities and usually they will see sense in your reasoning if you're not trying to defraud them.