Hi All,
One of my client, who is a service station owner have had some drive off losses for which he had not kept any records of number plates or exactly how much lost. And also have not had any records kept for wastage of groceries he sells in the shop. but he gave me an estimate of £1,500 for the financial year. my question is will HMRC accept this level of estimates. what I gather from the service station business is that, this is quite normal but not sure if I can deduct this from taxable income. grateful for any comments.
Many Thanks
Replies (6)
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What do you mean 'will HMRC accept this level of estimates'? Where are you thinking of putting the 1,500 on the tax return? I'd be very interested to know.
Me thinks you need an accountant! I'll let somebody else explain why what you are asking makes no sense.
Unless (and you don't indicate this) you are dealing with an enquiry and are looking to minimise a sales reconstruction exercise?
Trouble Ahead
You might well have a problem if your client gets picked for an enquiry.
It's always nice to have a diary of these wastages and drive-offs to show - just in case you're asked.
Tell your client to invest in some CCTV and report all drive-offs to the police. At least you'll have a crime number.
Eh?
Why would you include £1,500 or any other figure for wastage of groceries? His sales are what he has been paid by customers for groceries. His cost of sales are what he has paid for groceries, including any that he didn't manage to sell, adjusted by the opening and closing stock of groceries. His gross profit therefore already includes any wastage on groceries.
The same applies to "drive off" losses. He didn't get paid for the sale, so his overall sales figure and hence, his profit, is reduced accordingly.
Journal
I was assuming that this was some sort of journal to transfer the cost below the gross profit line.
Perhaps the OP could clarify.
Evidence
You need evidence. Without it, you're just gambling on who'll take your HMRC enquiry case.