As a business owner, managing expenses is key to maximising profitability and maintaining accurate financial records – but what happens when you’ve incurred a legitimate business expense but don’t have a valid receipt or proof of purchase?
Can you still claim it?
Here’s what you need to know:
1. HMRC’s Requirements for Claiming Business Expenses
HMRC generally requires valid receipts or other forms of documentation for all business expenses to prove they were incurred “wholly and exclusively” for the purposes of your business. This means that having no receipt can make it more challenging to justify an expense in the event of a compliance check by HMRC.
2. Alternative Proofs of Purchase
While a receipt is the most straightforward proof, if you’ve lost one, there are alternative forms of documentation that HMRC may accept. These include:
•Bank or credit card statements showing the payment.
•Email confirmations or order summaries for online purchases.
•A detailed note confirming details of the transaction and the purpose.
However, the description on these records should clearly indicate the nature of the business expense.
3. Petty Cash & Minor Expenses
For smaller expenses, such as parking or small office supplies, which may not always have receipts, HMRC may be more lenient. To stay compliant, keep a petty cash log detailing:
•Date of the expense.
•Amount spent.
•Purpose of the expense.
This provides a record of the transaction, even in the absence of a receipt.
4. What to Do If Receipts Are Lost
If you’ve misplaced a receipt, try contacting the supplier to request a duplicate. Many businesses are able to provide copies of invoices or receipts if you’ve made the purchase recently.
5. The Risks of Claiming Without Proof
If you claim expenses without adequate proof, you could face issues if HMRC chooses to investigate your tax return. In the worst case, you could be penalised for inaccurate tax filings, and the claimed expenses may be disallowed, increasing your tax liability.
Final Thoughts
While it is possible to claim business expenses without a receipt, it’s always best to keep detailed records and seek alternative proof where necessary. As accountants, we advise clients to maintain a well-organised system for storing receipts, invoices and any related documentation.
Need help managing your business expenses or ensuring compliance with HMRC? Contact us for professional guidance to keep your records in check and your business running smoothly!
Please contact us if you’d like to discuss your personal or business tax planning then call us on 01386 366741 or email here and one of our advisers will be in contact.