What Constitutes a Valid Receipt?

[woodygodfrey]

Hi!

Apologies if this has been asked before, I did a search but couldn't find anything.

I'm starting up as self employed. My business is buying and selling used vinyl LPs. Some of my stock comes from buying people's personal collections.

As I understand it, these people are selling their personal possessions so don't need to declare the profit but obviously it's a business expense for me.

Do I need to ask these people to give me a receipt? And if so what information must I obtain? Most private sellers aren't that keen to get involved in doing this sort of thing(who can blame them!) so ideally I'd like it if I could somehow just keep my own record of money paid but I suspect that's very wishful thinking.

Thanks for reading!

 

[JohnGreer(Accountant)]

Hi there,

What I would do would be to buy an invoice book (one of those carbon copy duplicate types) and then when buying a private collection write on the next invoice the date, name and address of the person you bought the records from and how much money you paid them. So for example "9 May 2013, Mr Smith, 1 The Road, £500 for collection of records".

I would ask them to sign the invoice to confirm they have received your money (especially if its cash) and then you can give them the top copy of the signed invoice for them to keep and you keep the carbon copy.

Out of interest, is there a particular type of genre etc that you are looking to buy?

Best wishes

John

 

[MyAccountantOnline]

Hi!

Apologies if this has been asked before, I did a search but couldn't find anything.

I'm starting up as self employed. My business is buying and selling used vinyl LPs. Some of my stock comes from buying people's personal collections.

As I understand it, these people are selling their personal possessions so don't need to declare the profit but obviously it's a business expense for me.

Do I need to ask these people to give me a receipt? And if so what information must I obtain? Most private sellers aren't that keen to get involved in doing this sort of thing(who can blame them!) so ideally I'd like it if I could somehow just keep my own record of money paid but I suspect that's very wishful thinking.

Thanks for reading!

I'd ask for a receipt where possible but dont forget an invoice isnt the only proof of purchase - you may also have an entry on your bank statement ie the cheque or bank payment, or perhaps a PayPal payment if you use Ebay etc.

 

[woodygodfrey]

Thank you for the replies.

John, It's solely Classical music I sell.

Some people have concerns that taking their details will mean they'll receive a dreary call/letter from the IR at some point. I guess I will just have to try and assure them otherwise!

Thanks again.

 

[US_US_Taxes]

There are a few ways around this:

- Pay by bank transfer or cheque so that there is an audit trail of payment and get a purchase book detailing the purchase particulars

- Keep the advert of the item purchased with the payments you have made

- Complete a receipt book of your own and ask them to put in their contact details and give them a carbon copy. (Latter section is to be anal)

HMRC love to play with people that have no receipts or proof of money being transferred to business bank accounts. I appreciate that it can be a bit of a fuss but trust me it is less hassle than HMRC asking for a lot of detail in an investigation.

Best of luck in your business too