Receipts for LTD

Pennywise

FestiveJoy wrote: »

The employer only now needs to have a checking process in place and be able to demonstrate that they satisfy the travel and subsistence rules at Section 337 ITEPA 2003 and Section 338 ITEPA 2003.

Which means the employer (i.e. you if you run a ltd co) has to do the checking etc. So same thing really. You still need proof that the travel/subsistence is allowable and that the money has been spent. How can you prove that if you don't keep records?

FestiveJoy

Pennywise wrote: »

Which means the employer (i.e. you if you run a ltd co) has to do the checking etc. So same thing really. You still need proof that the travel/subsistence is allowable and that the money has been spent. How can you prove that if you don't keep records?

No, not the same thing at all

As I said, for 6 April 2016 businesses are no longer able to apply for a dispensation and all existing dispensations have come to an end.

And in regards to sampling, well that isn't required now either.

:xmastree::xmastree::xmastree::xmassign:

00ec25

FestiveJoy wrote: »

And in regards to sampling, well that isn't required now either.

no, samp,ling isn't, it has bene replaced by what you have already mentioned: "checking" - which brings us back to the need to have receipts to show what was purchased, not what was spent.

HMRC's expectations are that checking will now be a real time activity, not as you correctly say, the old sample, and that checking is of whether it meets the conditions or not.

"When paying or reimbursing qualifying expenses in full, employers do not need to apply to HMRC for agreement to do so, they need only satisfy themselves at the time of making the payment that the expense would be fully deductible. This is a process that the employer can undertake in real time."

"Employers wishing to pay or reimburse employees expenses after 5 April 2016 will be able to do so without deducting tax or NICs from those payments where the expenses would qualify for a deduction and meet the conditions for payment."
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim30215

" the exemption will only apply if conditions A & B are met.

Condition A is that the payer, or another person, operates a checking system for checking that the employees are in fact incurring and paying amounts in respect of expenses of the same kind and that a fully matching deduction would be allowed under Chapters 2 or 5 of Part 5 ITEPA in respect of those amounts.

Condition B is that neither the payer nor any other person operating the checking system knows or suspects, or could reasonably be expected to know or suspect that the employee had not incurred an amount in respect of the expense, or that a deduction under Chapters 2 or 5 of Part 5 ITEPA would not be allowed in respect of those amounts."
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim30220

For an owner/director of a one person company it would be foolish in the extreme to think they can pay themselves scale charge expenses without having proof of what they purchased

TheCyclingProgrammer

a bank statement shows only what was spent with whom, not what you bought. Without receipts there is no proof the expenditure was on a business related item

Like I said, a bank statement entry *might* be sufficient proof of purchase *if* it’s obvious what it is. There are many examples where it would not be sufficient and you’ve mentioned some but I can also think of cases where it would be, especially if VAT is not a concern (eg because you’re not VAT registered or the supply is from overseas).

For example, MyCo has several monthly payments for subscriptions to online software services - these suppliers only supply one thing and it’s clear from the bank statement what the payment is for. A monthly payment to Github.com could only be for my company Github account. There’s no VAT on this supply to worry about either (I do account for it under reverse charge rules though).

I do think it’s better to have receipts and invoices wherever possible as there’s no downside to having more information but I also wouldn’t worry about the odd missing receipt if it’s on the bank statement. I’m not sure that a receipt from Costa Coffee showing that’s you bought a latte really adds any useful information over a bank statement entry because both are proof the the expense was incurred but neither are sufficient proof alone that the expense was incurred whilst on business - you’d surely need some other way to corroborate that you were travelling (eg some related travel claim - mileage or a train ticket).

00ec25

yes there is a degree of realism behind the physical existence of receipts for "everything", and obviously there are certain well accepted cases where no receipt is unremarkable: london underground ticket retained by gate machine (in the days before oyster cards and downloadable usage printouts) being a classic example

TheCyclingProgrammer wrote: »

Github.com could only be for my company Github account. There’s no VAT on this supply to worry about either (I do account for it under reverse charge rules though).

I agree that github is what it is, but that does not mean the payment from your company bank account can only be for an account in the name of your company. You may have more than one company and are trying to load one company with "excessive" costs

technically you do have to have a reverse charge VAT invoice from them to support your VAT return. Otherwise you cannot do what you state you do and would fail a VAT inspection if they decide to be strict (which i agree is unknown/low probability)

and before you get all upset I am aware you have already mentioned the higher standards required if VAT registered

TheCyclingProgrammer wrote: »

I do think it’s better to have receipts and invoices wherever possible as there’s no downside to having more information but I also wouldn’t worry about the odd missing receipt if it’s on the bank statement.

agreed, HMRC have themselves stated that as a stance they take

TheCyclingProgrammer wrote: »

I’m not sure that a receipt from Costa Coffee showing that’s you bought a latte really adds any useful information over a bank statement entry because both are proof the the expense was incurred but neither are sufficient proof alone that the expense was incurred whilst on business - you’d surely need some other way to corroborate that you were travelling (eg some related travel claim - mileage or a train ticket).

I accept your undoubted response "not in every case", but speaking as an auditor used to ways of the expenses fraudster....a receipt helps establish:
- the shop address (possible to have subsistence expense without travel costs)
- the time of purchase - you'd be amazed how many receipts I have queried due to their actual time ("oh sorry that must have been a purchase by my daughter" being a classic reply once)
- and (crucially) how many coffees of each type were purchased (client entertaining or ..... the wife is known to work in the same area!)
- how many of what were purchased eg: HMRC are strict about Costco purchases since membership there must be solely for business use, so the client who bought the family meat supply was given an unpleasant rebuttal when claiming the annual sub on the basis of the company bank statement payment but (foolishly) some actual receipts several months later
- and of course the all time favourite: the little "extras" added to the fuel bill when buying fuel for the company motor

HappyUser

FestiveJoy wrote: »

No, not the same thing at all

As I said, for 6 April 2016 businesses are no longer able to apply for a dispensation and all existing dispensations have come to an end.

And in regards to sampling, well that isn't required now either.

:xmastree::xmastree::xmastree::xmassign:

I don't understand what dispensations mean.
What are my obligations? Do I need to keep paper receipts? All? None?

I am VAT exempted by the way.

baza52

ask your accountant, thats why you pay them

00ec25

HappyUser wrote: »

I don't understand what dispensations mean.
What are my obligations? Do I need to keep paper receipts? All? None?

I am VAT exempted by the way.

dispensations is something way beyond your pay grade and should be left to your accountant since, as has been referenced several times already in posts above, their rules have changed.

your obligations have been explained already ....

vat "exempted" is a very technical term which I doubt you are correctly using. You presumably mean your turnover is less than £85,000 so you are not required to be VAT registered?
If you were exempted you would know what it meant as you would be making some very specific sales.

FestiveJoy

HappyUser wrote: »

I don't understand what dispensations mean.
..

Don't worry about it, you don't need to.
Someone else mis-posted.
As you have quoted me, from 6 April 2016 businesses are no longer able to apply for a dispensation and all existing dispensations have come to an end.

HappyUser wrote: »

What are my obligations? Do I need to keep paper receipts? All? None?

https://www.gov.uk/employer-reporting-expenses-benefits/record-keeping

:xmastree::xmastree::xmastree::xmassign:

Let me try again:
Who do you bank with that details all your purchases? :huh:

Pennywise

00ec25 wrote: »

- and of course the all time favourite: the little "extras" added to the fuel bill when buying fuel for the company motor

And the other good one whereby your tradesman puts fuel in the family car and tries to claim it as fuel for his van. Easy to spot when the van is diesel and family car is petrol. The receipt will show type of fuel whereas a bank statement entry doesn't. That's exactly why HMRC inspectors want to see receipts, or at least a sample of them.