Paying cash from business account

[Wasteways]

Well been trading for a while now have been paying cash to dispose of waste and not getting a bill as i get it cheaper this way. Now how can i prove where this cash is going as i cant afford to pay the full rate untill after christmas ?

 

[virtuallysorted]

Well you can't that's why it's cheaper - they aren't declaring you paid them the money to the taxman and therefore saving themselves the tax.

In terms of what you do, the cash you took out of the business looks like drawings to the taxman so you'll have to account for them that way.

Going forward, if you want to claim this as a valid business expense you need a receipt.

 

[Cheapest Printing]

Taking cash from the business account to pay for things is fine, however if you are not getting a receipt then you must declare it as personal drawings.

If you are doing CASH deals expect the VAT man and the TAX man to catch up with you soon!

Matt

 

[Wasteways]

Does the recipt have to be in the form of a invoice or can it be from a duplicate invoice book etc ?

 

[ScottNelson&Co]

If you are doing CASH deals expect the VAT man and the TAX man to catch up with you soon!

But is the Wasteways doing anything legally wrong by paying cash?

 

[Scalloway]

Paying cash in itself is not wrong but for tax purposes you must get a receipt.

 

[MyAccountantOnline]

Taking cash from the business account to pay for things is fine, however if you are not getting a receipt then you must declare it as personal drawings.

That's not correct - a cash payment for a business expense is still allowable for tax purposes. However if you are selected for an Enquiry by HM Revenue & Customs you may need to be able to prove that the cash was spent in this way.

 

[MyAccountantOnline]

Im sorry your not correct. Because the whole point is that he does not have the receipt, so how can he prove it???
Because I would bet money on the fact that this cash deal has been done to avoid VAT at the very least.

It may well be that the receipent isnt declaring this income BUT never the less if it is being paid as an business expense it can, and should, be claimed for tax purposes.

In reality their are many circumstances when receipts arent provided this doesnt mean they cant be claimed for tax purposes.

In fact estimated expenses can be claimed for tax purposes.

I am not suggesting you shouldnt keep receipts, of course all receipts should be retained as far as possible BUT expenses can be claimed if no receipt is availiable.

 

[MyAccountantOnline]

In his opening post he says "I cannot afford to pay the full rate until after christmas". Now that basically says to me that something is being avoided and its obviously tax, but your telling him to declare where the money has gone.
Now I know your an accountant and you would only advise the legal route(in public anyway lol, dont get offended I have met some accountants who would give the Krays a bad name) but he is clearly asking how he can get around this and the only way to "get away" with it is to declare it as personal drawings.

No offence taken - what I am saying is that if the OP is genuinely paying a business expense he can, and should, claim this whether its paid by cash, cheque, credit card, bank transfer etc.

 

[Mpg]

Ok so the OP is having his waste removed by someone who most likely doesnt have a waste management license and may well be fly tipping.

I think trying to save money is the least of his problems. There are Massive fines being handed out.

Its YOUR responsabilty to make sure YOUR waste is collected and disposed of correctly. If YOUR waste gets Fly tipped then they come after your

It may just be a case of he's chucking your stuff in with someone else's waste and pocketing the cash. (And possibly charging another company for your waste)

 

[MyAccountantOnline]

So someone who is avoiding tax should declare that to the taxman.
Yes it may be a business expense but I think the whole idea is how to avoid letting the taxman know lol, obviously im assuming that he is avoiding tax but why else would he be asking what he is.
Now surely it would just be better to declare it as drawings, yes he would still have to pay income tax but at least it satisfies the taxman???

Its not the OP's responsibility to ensure who he pays is declaring his/her income to HMRC.

The fact is he has incurred a business expense and should claim it.

Just because it's paid in cash doesnt necessarily mean the receipient isnt declaring the income. In the same way as when expenses are paid in other ways you dont know the receipient is declaring that income.

 

[MyAccountantOnline]

Okay fair enough, but if I had been paying in cash to avoid tax etc.. There is not a chance that I would declare it to the taxman.

You would miss out on saving tax on business expenses then.

Its also going to look a bit odd if your accounts are investigated by HM Revenue & Customs how some of your costs are being paid.

 

[MyAccountantOnline]

But will it also look odd that you have know invoices to prove these expenses.
Im phoning my accountant, your picking on me now lol

Tell your accountant he/she's a meany if they dont claim expenses when you've lost the invoices

 

[MyAccountantOnline]

Okay genuine question, because typical bloody accountant I cant get hold of him lol.
Say I was audited and they asked the company name where these expenses went, what would I do then?????

Easy - tell them. Seriously if someone isnt declaring income why should you be denied tax relief.

You dont want to get involved in any schemes involving tax evasion.

 

[arcon5]

Just get a receipt and do it properly is the answer.

If the service is £100 and you can't use it as a tax deductible your paying an extra £20 in tax at the end of the year. So if the guy is charging just £70 then your +£10. But then the guy is down £10 as if he took the £100 and declared the money he would get £80.
Who wins? (unless i'm missing something).

The only way in which this would be an ideal situation is if the guy was on benefits and it would afect such - in which case I think you have a morale duty of not giving work to a guy that will rip you and every other tax payer in the country off!

But to get round it... whats stopping you from fabricating your own reciept with a made up company name then if the company is found not to exist is it your fault? Since if he is trading and not declaring your not liable... Right or wrong? You can obviously be done for fraud if caught

 

[MyAccountantOnline]

If the service is £100 and you can't use it as a tax deductible your paying an extra £20 in tax at the end of the year.

It could be as much be higher if you are a higher rate tax payer and dont forget the class 4 NI if you are a soletrader/partnership.

 

[arcon5]

It could be as much be higher if you are a higher rate tax payer and dont forget the class 4 NI if you are a soletrader/partnership.

Fair point.

Can't be bothered to find the calculator at the moment but can't image it saving either party a huge some with it only being waste collection service.
Fly-tipping is probably the issue with the service provider here.

 

[MyAccountantOnline]

So if he took you advice he would be in Belmarsh lol

He'd probably escape a jail sentance

 

[arcon5]

He'd probably escape a jail sentance

Your wrong.

Peodophiles, rapists ect = community service (if they can be bothered)
TV license evaders, tax evasion, J-walking = life prison sentence