Cash expenses?

[EJG01]

Hi! If a business has to pay for expenses in cash i.e. doormen/DJs at a bar and there are no receipts/invoices, how will that affect CT and HMRC? What can we do to mitigate any potential problems? Thanks

[iridessa]

You need to be very careful paying cash to people like this......are they your employees...or are they self employed.....do you need a PAYE scheme etc etc. - not treating these payments correctly could be trouble for you further down the line.

For smaller items always try and get a receipt or invoice to back things up as then there is no come back on you. If you really can't then buy some cash vouchers from the stationers and write the details (date, amount, who you are paying) each time you make a payment. However, if your business is full of paperwork like this then again you are going to hit problems. If you want an easy life then make sure your books are in order with proper paperwork whenever you can.

[EJG01]

Hi! Thanks for that. We have receipts/invoices for all other expenses. The services are provided to us and the people are not employees. The expenses only constitute approx 4% of the sales figures. I think a duplicate voucher book would definitely be a good idea.

Thanks for your help.

[Philip Hoyle]

The services are provided to us and the people are not employees.

Have you followed the HMRC rules as to who are and who aren't employees? It isn't a matter of agreement between you and your "workers" - HMRC, backed up by the law, can, and often do, decide that workers are your employees and you are therefore liable to tax and NIC, not to mention penalties for not submitting payroll returns etc.

If you have followed the HMRC guidance and are satisfied that their working relationship with you is truly that of self employment, then at the least you need a record of dates paid, amounts paid, the workers name and address and preferably their signature to confirm that they've received the money. A duplicate book would be ideal, as would some form of cash book, maybe one page per worker, where you enter the dates and amount and they sign each line each time they get paid.

[EJG01]

Thanks. We are PAYE registered and have an accounting firm that runs payroll for us for all regular employees. The DJs and doormen however change on a regular basis, so would they constitute employees? I think the duplicate voucher book with their details on would definitely work.

Thanks

[Philip Hoyle]

ThaThe DJs and doormen however change on a regular basis, so would they constitute employees?

It's not how often they work for you or whether they have other jobs that matters, it's the nature of the work they do, which comes down to things like control, substitution, use of own equipment, etc etc.

Have a look at HMRC's employment status indicator - http://www.hmrc.gov.uk/calcs/esi.htm

[Jenni384]

I second the excellent posts by Philip Hoyle above.

It's possible the doormen could be employees and therefore you'd have to treat them as such - as it's you HMRC would come after for back taxes if you got it wrong and not the workers.

It's worthwhile checking it out properly to save you a potential headache in the long run.

If they do turn out to be self employed, then get an invoice from them for services rendered.