My client, a sole trader, incurs travel expenses and subsistence costs abroad and refunds himself from the separate "business bank account" that he keeps. He recharges these costs (plus vat) on to his customers pretty much in entirety. I have said that he still needs to keep expense records for these costs so that we can split them into the correct categories in the P&L. He suggests that as the costs are all recharged on, there is less need to keep expense sheets/receipts. I guess my thoughts are that if there ever were entertaining costs included (which presently there are not) they would need splitting out. Also HMRC may want to check they are "reasonable" as an expense claim. Am I right or just asking too much? Thanks
Expenses he recharges and then reclaims from the business bank account are a straight in/out transaction, however, you say "pretty much in entirety". The difference between what he recharges and when he reclaim from his business bank should be receipted.
