In April 2018, the Independent Parliamentary Standards Authority – which oversees MPs' expenses – referred Davies to the Metropolitan Police "in relation to an allegation of fraudulent expense claims submitted by an individual". Davies said he made an "honest mistake" in the expenses form he submitted for photographs at his Builth Wells constituency office. Accused of forging two invoices for £450 and £250 rather than submitting the true £700 claim for the photographs, Davies attributed the claim to "my inexperience of the IPSA code" and stated that he had done nothing wrong. On the 17th July 2018 he was interviewed under caution. Davies was questioned by police for a second time in October 2018 over the allegations.
In January 2019 police passed a file to the Crown Prosecution Service (CPS). On 21 February 2019, the CPS announced that Davies had been charged with two counts of making a false instrument and one count of providing false or misleading information for allowance claims. He pleaded guilty to two counts on the 22nd March 2019 in the Crown Court at Southwark.
On the 23rd April 2019 he was sentenced to a community order requiring 50 hours unpaid work, together with a fine of £1,500. In sentencing, the judge said "It seems shocking that when confronted with a simple accounting problem, you thought to forge documents. That is an extraordinary thing for a man with your position and your background to do."
The conviction automatically triggered the 2019 Brecon and Radnorshire recall petition. On the 21st June 2019 it was announced that 19% of voters had petitioned to recall Davies over a six-week period. As this was more than the 10% threshold, his seat was declared vacant and he automatically ceased to be an MP, necessitating a by-election.