International business accounting problem

lanmonkey

Hi guys!
I am starting a new business in the UK and we will be importing agricultural products from Africa. The problem I have is an accounting one…, in that the people we buy from will only accept cash and will give no receipts (African farmers, almost all of which have no bank accounts and often cannot read or write). As we are a UK company we obviously need to account for all the money we spend or the Inland Revenue will tear us a new one.

There are other businesses in our sector that buy produce in the same way and they have been going for years so there’s obviously a way around this, so far as I can see I have these options…

1> Write out a receipt, old fashioned style, and get the farmers to sign it (would the Inland Revenue accept this?)
2> Start up a second company in Africa and have the two companies invoice each other
3> Get fake invoices/receipts made (this is Africa were talking about, who’s gonna know? Probably not a long term solution though)

BTW the cash transactions will be done in USD so any money we spend will need to be transferred to Africa and converted.

Any advice you can give would be greatly appreciated.

Savvy_Sue

I'd go with 1. can't see why HMRC would not accept this. but await expert advice - do you not have an accountant and what do they say?

lanmonkey

Savvy_Sue wrote: »

I'd go with 1. can't see why HMRC would not accept this. but await expert advice - do you not have an accountant and what do they say?

Thanks Sue

We will be getting an accountant in due coarse but I didn't think it would hurt to ask advice online.

Would number 1 be ok if the farmers didn't even have a phone or postal address? some of them literally live in the middle of nowhere. Would the inland revenue need to check up on them?

steve1980

If they live in the middle of nowhere how do they organise deliveries?

lanmonkey

steve1980 wrote: »

If they live in the middle of nowhere how do they organise deliveries?

They dont, we go and collect.

Premier_2

lanmonkey wrote: »

Hi guys!
I am starting a new business in the UK and we will be importing agricultural products from Africa. The problem I have is an accounting one…, in that the people we buy from will only accept cash and will give no receipts (African farmers, almost all of which have no bank accounts and often cannot read or write). ...


...BTW the cash transactions will be done in USD so any money we spend will need to be transferred to Africa and converted.

Any advice you can give would be greatly appreciated.

How are you going to get appropriate export/import documentation from a supplier who claims not to be able to read or write.

How are you going to get significant amounts of USD into the country in cash? You think you can just pop into an African bank and walk out with a wheelbarrow full of foreign currency?

Trust me, if these suppliers are smart enough to carry out international trade and ask for payment in USD, they can (or know someone who can) read and write. They also presumably have bank accounts despite what they claim.

Tread carefully. Presumably without the ability for them to read or write there are no written contracts in place either?

lanmonkey

Premier wrote: »

How are you going to get appropriate export/import documentation from a supplier who claims not to be able to read or write.

How are you going to get significant amounts of USD into the country in cash? You think you can just pop into an African bank and walk out with a wheelbarrow full of foreign currency?

Trust me, if these suppliers are smart enough to carry out international trade and ask for payment in USD, they can (or know someone who can) read and write. They also presumably have bank accounts despite what they claim.

Tread carefully. Presumably without the ability for them to read or write there are no written contracts in place either?

Your response isn't on topic, but the suppliers (farmers) arn't doing international business, they are doing local business with our staff who we send to africa. The government certify all agricultural exports but government documentation does not constitue proof of purchase that will satisfy the UK inland revenue.

My business partner has spent 15 years doing local business in africa before he came to the UK. we know how business there works. satisfying the inland revenue's documentation requirements is the issue here.

paulwf

lanmonkey wrote: »

satisfying the inland revenue's documentation requirements is the issue here.

Have you tried calling them up and asking what would satisfy them? Much better to get it from the horses mouth so to speak, and they are usually a reasonably friendly and helpful bunch at HMRC if you are being proactive. Worst they can say is sorry they can't help you.

BTW I can't see any reason not to get an accountant now rather than later. The sooner you get correct systems in place the easier it is for them so the less they will charge you in the long run.

GilbertGradgrind

lanmonkey wrote: »

Your response isn't on topic, but the suppliers (farmers) arn't doing international business, they are doing local business with our staff who we send to africa. The government certify all agricultural exports but government documentation does not constitue proof of purchase that will satisfy the UK inland revenue.

My business partner has spent 15 years doing local business in africa before he came to the UK. we know how business there works. satisfying the inland revenue's documentation requirements is the issue here.

A lot of African banking transactions are starting to move towards being completed using a mobile telephone. Would a telephone bill showing the banking transaction be sufficient to demonstrate that the transaction took place as claimed?