You know you paid for something for the business. You can see the payment leaving your bank account. But when it comes to doing the accounts, the receipt is nowhere to be found.
Does that mean you can’t claim the expense?
Not necessarily.
A missing receipt doesn’t automatically mean a genuine business expense has to be left out of your accounts. But you do need enough information to show what you bought, how much you paid and why it was for the business.
What does HMRC expect you to keep?
HMRC requires businesses to keep accurate records of their income and expenses.
Receipts and invoices are an important part of that evidence, but they’re not the only records that can help establish what a transaction was for.
Other useful evidence could include:
- a bank or credit card statement
- an email confirmation or order history
- a supplier statement
- a duplicate invoice
- an online account showing the purchase
- a written record of what was bought and why
The important point is that the expense must be genuine, allowable and supported by appropriate records.
Lost the receipt?
Start by seeing whether you can replace it.
Many suppliers can provide a duplicate invoice or receipt, while online purchases can often be found in your account or email history.
If you can’t get a replacement, keep as much evidence as possible. A bank transaction may show that you paid a particular supplier, for example, but it doesn’t always show what you bought or whether the whole purchase was for the business.
Adding a clear note while you still remember the transaction can make a big difference.
What if you were never given a receipt?
Not every business purchase comes with a traditional receipt.
Perhaps you bought a second-hand piece of equipment from an individual or made another genuine business purchase where no formal invoice was provided.
Keep a record of:
- What you bought
- who you bought it from
- when you bought it
- how much you paid
- how you paid
- why it was needed for the business
Keep any supporting messages, emails or payment records too.
The stronger the trail of evidence, the easier it is to demonstrate that the expense was genuinely incurred by the business.
Is a bank statement enough?
Sometimes it can provide useful supporting evidence, but we’d avoid treating a bank statement as a universal replacement for receipts.
A payment of £75 to a retailer proves that £75 changed hands. It doesn’t necessarily prove what was purchased, whether it was wholly for the business or whether any VAT can be reclaimed.
Think of the bank statement as part of the evidence, rather than automatically being the whole answer.
What about VAT?
This is where the rules become stricter.
If your business is VAT registered, you would normally need an appropriate VAT invoice to support a claim for input VAT.
There are limited exceptions for certain purchases costing £25 or less, including some car parking charges, coin-operated machines, telephone calls and individual toll charges.
There are also simplified VAT invoices for supplies of £250 or less.
If a VAT invoice has been lost, ask the supplier for a replacement wherever possible. HMRC can consider alternative evidence in exceptional circumstances, but this shouldn’t be treated as the normal way to reclaim VAT.
So don’t assume that because an expense can be included in your accounts, you can automatically reclaim the VAT as well.
Do some expenses not need receipts?
Yes. Some expenses can be calculated using HMRC’s simplified expense rules rather than the exact amount you spent.
For eligible sole traders and partnerships, these can include:
Business mileage: using HMRC’s flat mileage rates rather than claiming the individual running costs of the vehicle.
Working from home: using a flat rate based on the number of hours you work from home each month.
Living at your business premises: using HMRC’s simplified method to calculate the private element of certain premises costs.
You’ll still need appropriate records to support the calculation, such as a record of your business mileage or hours worked at home.
What if your records have been lost or destroyed?
If records are genuinely lost or destroyed, HMRC says you should try to recreate them wherever possible: for example, by obtaining copies of bank statements or duplicate invoices from suppliers.
If you still can’t recreate everything, estimated or provisional figures may sometimes need to be used, with the appropriate information provided to HMRC.
This is different from routinely failing to keep records, so speak to your accountant before making an estimate.
Make missing receipts the exception
One missing receipt doesn’t necessarily mean losing a legitimate business expense.
A shoebox full of unexplained transactions is a different matter.
Good bookkeeping gives you a clear record of what you’ve spent, makes it easier to identifyallowable expenses and means fewer questions when your accounts or tax return are prepared.
And with Making Tax Digital for Income Tax, keeping accurate digital records is becoming an increasingly important part of running a business.
At North Devon Accounts, we can help you put the right bookkeeping and record-keeping systems in place and work out what can reasonably be claimed when the paperwork isn’t quite as tidy as you’d hoped.
Not sure whether an expense can be claimed?
Talk to us today.
