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Claiming expenses without receipts

Hi,
 
I joined the company as an accountant in Jul 10 and now am reviewing the Year End account ending Jul 10.
I noticed that most expense (Marketing, Computer, Office exp, Travel, etc) do not have the receipts for and the company made a loss of £35k.
 
Do I need to exclude the expenses for which I do not have receipts for from the P&L or just add them back to arrive at Profit Chargeable for CT or can I leave them the way they are?
 
Also I was wondering if there is a limit on expense that company is allowed to claim without having physical receipts for?
 
Please help.
 
Many Thanks,
OV

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Unusual

Do you know the reason for not having receipts?  Is it because, for example, the costs were incurred by directors/employees and then reimbursed by the company?  

Either way, I think it should be a priority to alert the company directors of the problem and establish procedures going forward to ensure adequate records are kept.  There are penalties for failing to keep adequate records.

As for corporation tax, obviously it is pretty unhelpful.  Can the costs be verified to bank statements instead?   I don't know whether HMRC prescribe specific documents or not in order to support the tax return, but you may find that bank statements are sufficient.  It might make it more difficult to establish which expenses are non-deductible.

Is the company VAT registered?  Has VAT been reclaimed on any of the costs with missing expenses?  If no VAT is being reclaimed, is there a missed opportunity to reclaim the VAT due to poor record keeping - maybe that could be improved?

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Claiming expenses without receipts

The travel expenses were mainly incurred by the director and marketing expenses are for Google advert that we do not have invoices for. We also have a lot of courier costs with no receipts. Since I started, I keep an eye on all invoices and receipts, however, there is hardly anything prior to this.

It is practically impossible for some expenses to track them from the bank statement since it shows CASH WITHDRAWAL of, say £500, that are recorder in travel and office supplies no VAT.  

Company is VAT registered and some VAT was claimed on no receipt expense but mainly not.

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Google ....

will presumably be for adwords and normally this is collected via a credit card. I think the statements will be sufficient evidence for that expenditure.

Couriers ... go back to the providors and ask for old invoices? Not usually a cash business is it?

Travel .. well £500 drawn out in cash is not travel in any context! You either have to shake the director involved for receipts or mileage claims not submitted thus far or write it back to his directors loan account. This could have tax implications and might ilicit some action on his part!

 

 

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I would expect to see

a few- very few - non receipted expenses but not cash withdrawals at £500 a time with no audit trail.

Still, you need to consider how far it is your job to manage the directors sloppy (to say the least) practices. Some listen, some don't but at the end of the day the owners are the one's signing the accounts/tax returns.

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Cash Witdrawals

But what if £500 was withdrawn for business trip but no receipts were presented?

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Then ...

it didn't happen! Think of the situation if this wasn't the case .... well we would all save a lot of time record keeping I suppose!

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Google Adwords

Hi,

Not sure how useful this is but you can go into the Google Adwords account and get a full transaction history:

- log into Adwords

- click on the Billing tab

- click on the setting for 'All Time' transactions

I appreciate this doesn't cover the other missing receipts but hopefully helps a little!

Regards,

Michael

 

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Expenses, without receipts

MPs, & MEPs do not seem to have any problems claiming expenses without receipts!!

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Expenses without receipts

Unless you have a dispensation (which I doubt if you are paying expenses without receipts) then the amounts should be recorded on the directors P11D. If you are claimimg a CT deduction for the expenses, then the Director must be liable to PAYE unless he can prove to HMRC satisfaction that the expenses meet the WEN test.

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A defined policy can be of help

I think the other contributors to this debate have been pretty clear - it is essential to get receipts for all expenses.  In dealing with HMRC inspectors on an audit some years ago, I discussed the issue at length as to what they might consider to be 'reasonable' recognising that its is not always possible to capture receipts for all travel expenses etc. (e.g. parking meters don't give receipts).  Of course they were very cagey about giving any guidance.  So I asked them what the policy was for HMRC Inspectors - seemed a reasonable question!  Turns out there was (at that time) a defined per diem rate which could be claimed without receipts.  they were, of course, at pains to emphasise this was in exceptional circumstances and should never be the 'norm'....  They also pointed out this was a documented policy.

So the company involved created an unreceipted expense claim 'policy' which was approved by the Directors and said that, in exceptional circumstances, a maximum claim of £10 per day could be made as reimbursement for travel expenses if receipts were not available.  I sent the policy to HMRC for comment - not suprisingly I didn't receive a reply.

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Hypocrisy

Travel .. well £500 drawn out in cash is not travel in any context!  Posted by Steve Holloway on Wed, 16/02/2011 - 10:57

 

Unless of course you're in charge of HMRC and need to hop on a train (first class of course) to go to some meaningless meeting.

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Entertainment - We live to eat (HMR&C)

Don't forget that "Travel" usually involves some sort of food & drink, which for CT purposes you would want classed as subsistence and not the dreaded entertainment !

The level of daily level of subsistence would have to be within the HMR&C rules, otherwise the excess would be classed as a P11d benefit in kind.

John

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