Receipts - thinking about closing my business

[business123456]

So I make very little profit for my business. That is why I can not afford an accountant and asking help.

My mum is a single parent who tries to provide for my younger brothers and sisters. I work part time and also started this business to make any income to make it a bit easier for my mum.

Basically I try to buy anything I can get my hands on and try to sell it for more. It has gone to a point where I have to tell any seller before they sell to me that they have to provide me with a reciept. They always say that they will but they never do. What do i do? If I know their name and address can I just write myself a receipt?

I am starting to think about closing my business as I do not want an hmrc enquiry to take place where I can not provide receipt for most of my purchases even when it is not my fault and nothing I can do about.

This post may be a strange question. I am still young so I am still very inexperienced in the business world. Any help would be great.

 

[IanG]

Can I start by saying you appear to be doing a great thing and you should carry on.

Do you deal in cash or are there bank records which would assist you? Assuming you're thinking about providing evidence to the HMRC then you're probably already some of the way there in terms of visibility of the movement on the money. You'd need to seek professional advice on that but as I understand, where receipts are not available, an audit trail of expenditure is preferable to no records at all.

In addition to that, you may find you have more success if you make it easier for people to provide the evidence of the sale, ie. if you turn up with something already written out and they just have to sign and date it. That's better than putting the onus on them completely to come up with something.

 

[business123456]

Hey IanG, thank you for your reply.

This is all done on the internet. I buy anything I know I can make money on and sell it for more on ebay or forums.

Most of my payments have been made via bank transfer with one or two done via paypal. Obtaining receipts for expenses is not a problem as I usually buy from big companies. But buying stock to resell from small businesses is a pain. Heck, I do not even know if they are even registered as a legal business.

Would it be ok if i know there name and address to write myself a receipt and pretend it is sent from them? Obviously that would be an issue if i ever do become vat registered but that is for another day.

I would look for an accountant but I can not afford one right now. I wish i could carry on but I think it is just too much for me. I do not want the taxman saying that I actually lose money just because I can not provide a receipt to prove what I bought.

 

[Anna Chandley]

If you are buying over the internet there must be some evidence of your purchases in the form of e-mails, order confirmations or similar which detail the item and price paid. These could be used to support your purchases in place of an actual receipt. Even a screenshot showing the item to be purchased would be better than nothing especially if this could be easily linked to the bank or paypal payment.

In the absence of any other evidence you should make a note of the seller, items and costs in a similar way to how you may complete a petty cash slip but do not pretend that the receipt has been sent from the seller.

If you were VAT registered you would be unable to reclaim VAT on purchases if you didn't have a valid VAT invoice but I suspect that most of your purchases are being made from non VAT registered persons so there would be no VAT to reclaim anyway.

 

[business123456]

Thank you for your reply Anna,

Most of my purchases have been made from people selling on forums so I do not really have that much proof.

I do not know how all you people seem to do business over the internet if they can't even provide you with a receipt. Am I the only now who is trying to do it the right way?

 

[StevensOnln1]

Did you agree the price on the forum (or via private message) before collecting/receiving the items? If you keep copies of the forum posts/message that would give you something to backup your figures.

 

[business123456]

Thank you for your reply stevens.

I do have Skype chat so i guess I could screenshot that and print that out. But this is not just a one of thing. A lot of people are not doing there job properly and something should be done about it.

I think from now on I should ask for an invoice before they sell me something so i know they won't run off after selling me something. But then again I will have to explain to the numpties what an invoice is and how to make one. ahhhhhhhhh!

 

[IanG]

I do not know how all you people seem to do business over the internet

Because we're not all buying from private individuals or companies who don't offer invoices.

 

[StevensOnln1]

The onus is on you as a business to collect receipts for your purchases. It is you who has to be able to prove what your expenses were, there is no requirement for private sellers to keep any sort of records as they are not running a business.

 

[business123456]

The onus is on you as a business to collect receipts for your purchases. It is you who has to be able to prove what your expenses were, there is no requirement for private sellers to keep any sort of records as they are not running a business.

i think this is going a bit off the road. How can i collect receipts if i don't get issued one. Private sellers may not need to keep records but they must issue records if the buyer asks for one. If you buy something, you do not go asking if he is a private seller or a business. I know I have to get a receipt that is the whole point i created this forum. Even if he is a private seller he should still have the humanity to still provide a receipt.

Also even if you know he is a private seller and you buy something from him and then sell for profit, that makes you a business. So how on earth do you go about getting a receipt from a "private seller"

Like i said before, I now know that I should ask for an invoice before buying from anyone and then a receipt. If they do not provide me with one then they can stuff themselves.

 

[StevensOnln1]

The simple answer would be to write out the receipt yourself and ask the seller to sign it.

 

[business123456]

The simple answer would be to write out the receipt yourself and ask the seller to sign it.

The sellers refuse to give me a receipt or sign anything

 

[StevensOnln1]

You can't force someone to give you a receipt. There is no legal requirement for anyone to give a receipt unless they are VAT registered. Your only real way of persuading them is to refuse to go through with the purchase unless they agree to sign the receipt.

 

[business123456]

You can't force someone to give you a receipt. There is no legal requirement for anyone to give a receipt unless they are VAT registered. Your only real way of persuading them is to refuse to go through with the purchase unless they agree to sign the receipt.

That is why from now on I am going to make sure that I get an invoice before I buy anything from anyone. So if they fail to provide me with a receipt afterwards then at least i will have proof to show purchase.

Anyone reading this, make sure you do this.

 

[IanG]

I would think your own records and a copy of the advert is sufficient evidence, but I can't confirm whether that is the HMRC position.

It must surely affect people who buy lots of things from the general public.

Although if people point blank refuse, I'd be asking further questions about why that might be. If its electrical items or similar, and they're not willing to put their name to something, you must consider that it may be stolen, faulty or both.

 

[business123456]

I would think your own records and a copy of the advert is sufficient evidence, but I can't confirm whether that is the HMRC position.

I do not think it to do with stolen or faulty but more to do with them not registered as a business and avoiding tax.

 

[IanG]

Does sound like you have the pick of some bad people to deal with.

How many people have you dealt with and what proportion don't want to evidence the sale?

 

[StevensOnln1]

I do not think it to do with stolen or faulty but more to do with them not registered as a business and avoiding tax.

If they are selling their own possessions then there is no tax due for them to avoid and they certainly would not need to register anything with HMRC.

 

[business123456]

i never said if they are selling their own possession or not. Even if they were selling there own possession what do you expect me to do if they refuse to give me a receipt.

The people I have been dealing told me before buying that they would issue me with one but never did.

 

[Scalloway]

As has been said before HMRC will accept evidence of payment in the abscence of a receipt. Emails, Paypal payments etc.

 

[business123456]

I don"t even see how receipt is good evidence to show you purchased something. So many exploits For example, how you can prove that the details of the seller is real and not fake. Therefore how could you tell if the buyer wrote the invoice instead of the actual seller.

 

[JPMiddleton]

I buy collectable items from private sellers on occasion (not very often) and when I do I print an invoice and email it to them. They sign it and put it in the parcel they send to me.

If they're not willing to do that (in my opinion) you shouldn't buy from them.

 

[business123456]

I buy collectable items from private sellers on occasion (not very often) and when I do I print an invoice and email it to them. They sign it and put it in the parcel they send to me.

If they're not willing to do that (in my opinion) you shouldn't buy from them.

What were the exact details that you included in the invoice?

 

[business123456]

I buy collectable items from private sellers on occasion (not very often) and when I do I print an invoice and email it to them. They sign it and put it in the parcel they send to me.

If they're not willing to do that (in my opinion) you shouldn't buy from them.

How is that proof that the signature is genuine. That signature could be anyone. I still don't get how receipt is a valid form of proof.

 

[StevensOnln1]

That's why you record the seller's name and address. That way HMRC can go to the seller and verify the details with them if they question whether it is genuine. Also, it would be fairly easy to tell if the same person (or group of people) had produced a load of fake signatures.

 

[teddys]

Dear business123456,

First of all, I must appreciate your genuine efforts to be a responsible businessperson. This is indeed welcome in today's contrasting environment characterised by an aggressive taxman on the one side and a flourishing tax- avoidance industry on the other.

That said it appears from a reading of your posts that may be you're a bit over concerned. Let me explain: whichever source you have bought whatever stuff from, so far as you're concerned, three things are clear:

a) these were bought for the business and therefore technically it was an expense incurred wholly and exclusively for your business. As others have already said there are normally two types of evidence. i.e. direct evidence namely invoices etc, or indirect/circumstantial evidence namely evidence of verbal, written (including) communications with the vendors, subsequent payment details etc. Unless it was a cash payment (even then there could be sources of circumstantial evidence) such evidence, if you think a bit, should be available.

b) your business paid for it - there could be bank/paypal/credit card statements and it was not a personal payment done either directly or indirectly.

c) you have made onward sales of whatever you've bought in. Or they are held in stock.

If these hold true, taken together they provide reasonable assurance to an outsider about genuine nature of the transaction.

Whilst the burden of proof lies with you to prove that it was a business transaction the taxman may have this even onerous task of proving that it was a expense incurred not for business. Which in your case looks a near impossibility.

So may I suggest that you just relax, concentrate on your business, take it to the next level, continue to support your mom and when ready take a small business account on board!!

 

[TurboIT]

Can I start by saying you appear to be doing a great thing and you should carry on.

Do you deal in cash or are there bank records which would assist you? Assuming you're thinking about providing evidence to the HMRC then you're probably already some of the way there in terms of visibility of the movement on the money. You'd need to seek professional advice on that but as I understand, where receipts are not available, an audit trail of expenditure is preferable to no records at all.

In addition to that, you may find you have more success if you make it easier for people to provide the evidence of the sale, ie. if you turn up with something already written out and they just have to sign and date it. That's better than putting the onus on them completely to come up with something.

I think Ian is right, it is more probably lack of time / not knowing how to draw up a receipt why people don't actually do it.

Make a template on the computer and take it with you and make people sign it. If you wanted to spend a little money and look more professional you can have receipt books made which are in triplicate with carbon copy paper, but if i was you I would keep costs down and do it on the computer.

 

[business123456]

Thank you for your help ladies and gents.

I just want to make sure I do everything right. I think I get a pretty much idea of how to go about doing this now.Thank you for your help and everyone else who has contributed.