Accountant wont allow these expenses

paddypaws101

My accountant ( actually a book keeper not chartered accountant ) has disallowed a couple of receipts from my recent return.
Two receipts totalling £115 each, paid by debit card and clearly showing up debitted from my bank account to a company whose name clearly labels them as supplying to my industry.
BUT, there is no name and address detail on the invoice either for the company or myself which he says makes them invalid and would put me in a position of tax evasion IF I had an enquiry ( had one once before, hoping never to go there again )
I think the company is slightly dodgy as they have not responded to my requests for proper invoices, but I bought from them in good faith and up till now had no doubt that the invoices were sufficient.
Is he right, or should I stand my ground and demand they are put in to the return?? ( he wants me to sign a disclaimer if I do go down this route! )

McKneff

He's right of course.

If the bit of paper doesnt have a name and address on it, it isnt an invoice. Its a bit of paper.

I cant blame him for wanting you to sign a disclaimer.

Keep on at the company for a proper invoice.

POPPYOSCAR

McKneff wrote: »

He's right of course.

If the bit of paper doesnt have a name and address on it, it isnt an invoice. Its a bit of paper.

I cant blame him for wanting you to sign a disclaimer.

Keep on at the company for a proper invoice.

I agree. The accountant is doing his job and trying to keep you out of trouble.

System

Are they invoices or receipts? You mention both. Receipts don't need the info but invoices do

paddypaws101

!!!!!! wrote: »

Are they invoices or receipts? You mention both. Receipts don't need the info but invoices do

Yes I did use both terms! Well the heading on them both reads ' Invoice' but in fact I received them as receipts when the goods were delivered.
Can I ask if this rule is written formally somewhere or is this your working knowledge?

I do of course know he is doing his job, and protecting me...which I appreciate. It is however terribly galling to think I am paying tax on these items which were so clearly used for my business.

chrismac1

I think this accountant is being somewhat pedantic. If I am satisfied that a business expense has been incurred, I am putting this stuff through the accounts. In a case like this, as with any other risk area, it would be mentioned in my close out letter to you. Incidentally getting decent invoices from many online suppliers is getting harder and harder, at some point HMRC will finish up in the 21st century and not stuck in the 19th insisting on a paper trail. If this is a reputable business, the threat of a Data Protection Act "producer" is often enough to put the fear of God into folk and dig out one or two documents, given that a "producer" often runs to hundreds of documents.

When it comes to receipts, in my view Tesco are one of the worst, especially considering their size. By comparison, Morrison's receipts split the sale nicely into VAT and non-VAT, thus making it easy to claim back exactly the right amount of VAT on expenses which are business. Whereas Tesco receipts normally don't do this so you are guessing really. Looking at the overall risk:

1. 3% of SA returns get inspected per year.
2. If you are in a high risk sector (cash business, construction) make this 10%.
3. If you're not, make this 1%.
4. Assuming these items are exceptional ones, only a very diligent and well-trained inspector is going to pick up on these, so that's probably 5% of inspectors.

So overall you could be looking at a 5% risk of a 1% risk here, not worth losing any sleep over this. Plus you could threaten to point the inspector in the direction of your supplier if they are still in business, that should get them sorting out a valid invoice pronto!

antrobus

paddypaws101 wrote: »

My accountant ( actually a book keeper not chartered accountant ) has disallowed a couple of receipts from my recent return....

There is no particular requirement to be in possession of an invoice to support an expense claim for income tax purposes.

Stand your ground. Insist that they be included on your tax return, and sign whatever 'disclaimer' he puts in front of you. Then get yourself a new accountant. I can't imagine for one minute that your business is one that requires an audit, so your accountant shouldn't be wasting his time and your money checking anything. Their remit should be to prepare accounts on the basis of the "accounting records, information and explanations" you have supplied and standard practice would require you to 'sign off' the accounts confirming that you have done so.

POPPYOSCAR

Just out of interest, what happened last time you had an investigation?

paddypaws101

POPPYOSCAR wrote: »

Just out of interest, what happened last time you had an investigation?

Well I am in one of the fairly high risk groups. I switched from my previous accountant and this present book keeper found large amounts unclaimed for in my property return. He applied for previous years accounts to be altered and we think that triggered the investigation.
Revenue will ALWAYS find something to charge, but I was not charged any penalty just amended tax amounts and of course interest!

paddypaws101

antrobus wrote: »

There is no particular requirement to be in possession of an invoice to support an expense claim for income tax purposes.

Stand your ground. Insist that they be included on your tax return, and sign whatever 'disclaimer' he puts in front of you. Then get yourself a new accountant. I can't imagine for one minute that your business is one that requires an audit, so your accountant shouldn't be wasting his time and your money checking anything. Their remit should be to prepare accounts on the basis of the "accounting records, information and explanations" you have supplied and standard practice would require you to 'sign off' the accounts confirming that you have done so.

Well, he is acting as my Book keeper so I guess he SHOULD be checking things like this. Also he sorted things out over the Inquiry so does not want me to make any more mistakes.

chrismac1

If it makes anyone feel any better I've seen a quite large invoice was defective in similar ways to the ones mentioned, and which got past auditors and HMRC visitors. Note in this context that the definition of "quite large" is between £500k and £1m. As I said some large companies such as Morrisons are better than some others such as Tesco. You do what we did in the case of the quite large defective invoice:

1. Put as much pressure on the company to do the decent thing and send a proper invoice. Unfortunately some clot had paid the invoice so we were limited in the level of pressure, though next time they wanted a big P.O. we held off issuing it until the invoice had been credited and then reissued.

2. Book the invoice, it's not a disallowance it's a business expense.