Expenses with no receipts

[NewCourierSE]

Hi guys,
I'd like to ask you Professionals about necessary receipt of business expenses.
My friend told me that there are some kind of expenses dont require any receipt. This is what his accountant told him.
This is really strange for me. Is that true ?
I know the situation when we keep mileage log, then we dont need any receipt of fuel purchase for example.
But he told me that there are many more situation when we can claim expenses with no receipt.

Any idea or advice ?

thanks a lot in advance

 

[Retired_Accountant]

Yes and no.
You could of course claim anything without a receipt and simply hope the taxman never asks to see proof. However, it depends what kind of business you're in. There are many "concessions" for the self employed allowing a small weekly deduction for laundry, use of home as office, etc which do not require receipts - however the amounts involved are small, probably amounting to a tax saving of about £50 a year.

If you happen to be a lorry driver for instance you are allowed a meal each day for which no receipt is required providing the amount claimed is under £5. However, I have known tax inspectors try to insist on receipts - they often need reminding of their own rulings.

So yes your accountant is right, but the amounts involved are minimal and usually business specific.

 

[NewCourierSE]

But my friend told me that he can claim tools expenses with no receipt. Its about 1000 quit. Do you think that it is ok ? Is there any legal way ?

 

[MyAccountantOnline]

But my friend told me that he can claim tools expenses with no receipt. Its about 1000 quit. Do you think that it is ok ? Is there any legal way ?

It is good practice to keep all invoices and receipts but sometimes this isnt possible and other forms of evidence mean genuine expenses can still be claimed.

You may find the HMRC guidance here useful.

 

[Matt G]

If you think that some receipts will provide you a certain benefit on your actual cash flow, like "Retired Accountant" said "yes and no", i think that the answer is totally yes, and i will tell why:

1. If IRS or any financial institute comes in control or makes a crosswise control and don't find the receipt on your accountancy files, and finds it just on the issuing of the receipt, you will be in trouble, and you will get penalized.
2. For personal receipts coming from fuel, deduction is free as long as you have comodat contract, between you ( the firm ) and the car you are using.3. Other professioanl expenses that don't require 100% receipts can be your personal costs ( like home bils, personal bils - where like the fuel stuff, if you don't have a contract between the firm and location you cant deduct ).
As a personal opinion, all the costs that are being done for company interest, or even personal if you meet the quidlines, are good to be put in your accountancy files, for reasons like VAT deduction, and Taxation.

Hope that my reply was helpful..

Warm Regards,
Matt

 

[MyAccountantOnline]

.....

1. If IRS or any financial institute comes in control or makes a crosswise control and don't find the receipt on your accountancy files, and finds it just on the issuing of the receipt, you will be in trouble, and you will get penalized.
....
Matt

Hi Matt

I suspect you are referring to US tax, in the UK we have HM Revenue & Customs (HMRC) who dont do crosswise controls' but do undertake Enquiries.

HMRC dont automatically penalise people who dont retain all receipts.

 

[Matt G]

If so, i think this has a side of evasion.
Please corect me if i am whrong..

Also, like i mentioned before, certain receipts aren't meant to be hold into accountancy, but usually all that are related to the firm activity should..

Respectfully,
Matt

Hi Matt

I suspect you are referring to US tax, in the UK we have HM Revenue & Customs (HMRC) who dont do crosswise controls' but do undertake Enquiries.

HMRC dont automatically penalise people who dont retain all receipts.

 

[MyAccountantOnline]

If so, i think this has a side of evasion.
Please corect me if i am whrong..

Also, like i mentioned before, certain receipts aren't meant to be hold into accountancy, but usually all that are related to the firm activity should..

Respectfully,
Matt

Hi Matt

What makes you think someone is evading tax if they dont retain a receipt?

In reality people do buy items for which receipts arent given eg small purchases from private sellers, car boots sales etc., and sometimes receipts are lost - it doesnt mean someone is involved in tax evasion

 

[Matt G]

Well, lets get back to the initial question. I assumed that he want's to know if the receipts involved with his personal firm are necessarily to be hold into accountancy..thing that can be debated..since that are a lot of costs, etc..

Like in your example the "car boots sales", and loosing the receipts, this can be treated as an incident, and why not if the value can affect the balance, return to the shop and ask for a duplicate.

More or less, the small receipts are not very important in the balance of the entity, but at the same time, the firm can take benefit from them ( VAT for example - )..

And on the other side, if we consider the IRS side, they could consider it evasion, since you are not adding into the accountancy the receipts.

From my personal side of view this can be with ups and downs, but for many times, they can consider it this way..Probably in UK, is not important, and birocracy, is not as big as in other countries, and that's why you consider small receipts are not so important.

Hi Matt

What makes you think someone is evading tax if they dont retain a receipt?

In reality people do buy items for which receipts arent given eg small purchases from private sellers, car boots sales etc., and sometimes receipts are lost - it doesnt mean someone is involved in tax evasion

 

[MyAccountantOnline]

Well, lets get back to the initial question. I assumed that he want's to know if the receipts involved with his personal firm are necessarily to be hold into accountancy..thing that can be debated..since that are a lot of costs, etc..

Like in your example the "car boots sales", and loosing the receipts, this can be treated as an incident, and why not if the value can affect the balance, return to the shop and ask for a duplicate.

More or less, the small receipts are not very important in the balance of the entity, but at the same time, the firm can take benefit from them ( VAT for example - )..

And on the other side, if we consider the IRS side, they could consider it evasion, since you are not adding into the accountancy the receipts.

From my personal side of view this can be with ups and downs, but for many times, they can consider it this way..Probably in UK, is not important, and birocracy, is not as big as in other countries, and that's why you consider small receipts are not so important.

I think the OP's had a reply to his question and as I said we dont have the IRS in the UK.

 

[Retired_Accountant]

I dont think there is any point in comparing the USA tax system wit our own. The IRS like many American institutions has far too much power and is intrusive to an extent that would be illegal under European law.

Maybe one day we will all be microchipped at birth, but thank God I wont live to see that day. However, I might well live to see it happen in America.

 

[Spongebob]

Maybe one day we will all be microchipped at birth, but thank God I wont live to see that day. However, I might well live to see it happen in America.

Perhaps you already have!

 

[Matt G]

Well this is probably due the fact that one country legislation is different and works so differently from others. I think that you need to update all the time, and be competitive on the market as well.

 

[MyAccountantOnline]

Well this is probably due the fact that one country legislation is different and works so differently from others. I think that you need to update all the time, and be competitive on the market as well.

But, with respect Matt, you are on a UK website.

 

[Deleted member 59730]

I was told by a tax inspector that petty cash vouchers were acceptable for small amounts if written at the time the expense was created. Parking meters are a case in point.

Purchases made in circumstances where a receipt is difficult to obtain should give an explanation on the petty cash voucher.

 

[tdarls]

I have been given some information about a group of self employed aircraft engineers based in the UK which all claim to be paying less than 10% tax and getting huge VAT returns (10000 pounds) annually. They also claim hundreds of pounds in fraudulent fuel usage and tool purchases (they live 3 miles from work and are provided all tools). They state that they, quote "will never get caught" and they don't need receipts. The catch is although they are self employed contractors they have worked at the same company for years at a time? After enquiring a little further I was shown a pay check (by a cocky man), and the his weekly tax refunded was almost the same as as the weekly worked hour income. His excuse was his accountant didn't need receipts and it wasn't illegal. His hourly rate was 32 pound and only worked 4 days a week. He claimed he was taking home just over 50000 a year. Is there anyway any of this can be explained in legal terms? whats with the VAT returns?