I have petrol expense on the bank statement and I do not have the receipt. Is it still allowable ? - The Book-keepers Forum (UK)

Adrian99 · Senior Member

I have petrol expense on the bank statement and I do not have the receipt. Is it still allowable ?

Peasie · Expert

What? You thought I was a sheep?

You better sit down for this one, Shaun (Shamus) isn't the alien from American Dad either. smile

2nd EDIT : I don't think you're alone in thinking I'm female. The avatar has confused others before.

-- Edited by Peasie on Wednesday 17th of July 2013 08:12:55 PM

FoxAccountancyServices · Expert

Hi Adrian

A few clarification questions....

Sole trader or Ltd Co?

Car or Van?

VAT registered?

Ta!

Adrian99 · Senior Member

Hello Michelle,

Sole trader

Motorbike

Not Vat registered

Many thanks,

Adrian

Shamus · Forum Moderator & Expert

You get this a lot with clients who think thatt evidence is optional.

basic response is that if there's no receipt then it never happened so money accounted for as drawings for self employed / DLA for companies.

Adrian99 · Senior Member

Many thanks Shaun,

What about when there is receipt but there is no entry in the bank statement ? As my service took only cash at that moment ?

Thank you.

Adrian

Shamus · Forum Moderator & Expert

Again, very common situation.

One situation is one of timing where at some stage the business will reimburse the expense at which time it should appear in the bank statement.

On other occassions you will hit scenarios where clients accept cash and pay from that cash. Both the invoice for the sale and the receipt need to go through the books even though neither may have caused any movement on the bank statement.

The real issue is where cash businesses don't declare all of their income which is why HMRC are so keen on taking that sort of business over the coals.

All that we can do is try to keep clients on the straight and narrow as if they're not our MLR obligations mean that we need to report them for tax evasion.

FoxAccountancyServices · Expert

I personally wouldn't be as aggressive as Shaun in this situation.

If there are a couple of missing fuel receipts, and they have been paid through the bank account, thus the bank narrative shows its a fuel station, I wouldn't have any issue putting it through. If there were many missing, I would put them through and explain in writing to the client that they run the risk of having these disallowed in the event of an investigation. I would ask the client to try to locate the invoices, explaining that I will want to be sure there is nothing like sweets or food on those invoices. If these materialise, then I'd do a journal to drawings, for the appropriate amount.

If there are amounts paid to the bank for which you have no invoice, I would ask the client about them. They could contact the bank and ask for a copy of the cheque. If it was cash, and they don't have answer for where it came from, I would first see if there were any invoices outstanding that it could possibly relate to, and if I was still non the wiser, I would add to sales.

Once the accounts were prepared, I would again explain in writing what I had done, and the possible consequences.

FoxAccountancyServices · Expert

PS.. The service provider should be able to give you a copy receipt, especially if an MOT was done.

Adrian99 · Senior Member

Thank you Shaun,

I have received the MLR Certificate from HMRC.

It includes a link hmrc.gov.uk/charter

If I read the info from HMRC and the resources from the Forum about MLR is it ok ?

Or it should be more study than this ?

Many thanks,

Adrian

FoxAccountancyServices · Expert

Adrian99 wrote:
Also, I have some receipts from service that are not on the bank statement as the guy only took cash payments at that time.
Are these allowable ?

Sorry Adrian, misread this

If the trader has paid cash out of his own pocket for these services, you can either show capital introduced or reduce drawings

Sorry poppet!

Peasie · Expert

Shamus wrote:
On other occassions you will hit scenarios where clients accept cash and pay from that cash. Both the invoice for the sale and the receipt need to go through the books even though neither may have caused any movement on the bank statement.

The real issue is where cash businesses don't declare all of their income which is why HMRC are so keen on taking that sort of business over the coals.

I'm looking at a client's records just now (I am still waiting on all the records) and I'm beginning to wonder if they even have a cheque book. All the sales are in cash and most of the purchases are in cash. There are a couple of suppliers paid by weekly direct debit. As they have to pay the bank 47p for every £100 they pay in to the bank it makes sense to do things this way. Using cash doesn't mean tax evasion every time.

Adrian99 · Senior Member

Thank you Michelle,

There was a mechanic who was just starting his business.
Gave me a hand written receipt, but the receipt has the logo of his company.

Kind regards,

Adrian

FoxAccountancyServices · Expert

I have a client like this at the moment too!! Its a nightmare trying to match things up!

Are you getting consecutive numbered sales invoices? I have encouraged mine to buy a duplicate book! Fingers crossed!

As for the cash purchases, well from a cash point of view, if there's no invoice, how am I suppose to know there's been a purchase!! LOL

FoxAccountancyServices · Expert

Adrian99 wrote:
Thank you Michelle,

There was a mechanic who was just starting his business.
Gave me a hand written receipt, but the receipt has the logo of his company.

Kind regards,

Adrian

Yes just pop that to motor expenses (DR), and then to your capital account (CR).

Adrian99 · Senior Member

Thank you Michelle for the fast reply,

No client for the moment, just trying to do my books as good and legally as I can.
I am just starting on bookkeeping business step by step by putting my books in order first.

Maybe buying for them stationery and than add this to their accountancy bill could be a solution.

Have a lovely and sunny day.

Adrian

Shamus · Forum Moderator & Expert

Peasie wrote:
Shamus wrote:
On other occassions you will hit scenarios where clients accept cash and pay from that cash. Both the invoice for the sale and the receipt need to go through the books even though neither may have caused any movement on the bank statement.

The real issue is where cash businesses don't declare all of their income which is why HMRC are so keen on taking that sort of business over the coals.
I'm looking at a client's records just now (I am still waiting on all the records) and I'm beginning to wonder if they even have a cheque book. All the sales are in cash and most of the purchases are in cash. There are a couple of suppliers paid by weekly direct debit. As they have to pay the bank 47p for every £100 they pay in to the bank it makes sense to do things this way. Using cash doesn't mean tax evasion every time.

Hi Peasie,

no, wasn't suggesting that at all. If you re-read my answer you will see that what I was going for was that some people deal in cash and the money never touches the bank but the paper trail makes everything ok as we sort it out through the books.

The issue with some people who are paid in cash though and also make payments in cash is that some of them can have a tendency to not record all payments that they have received which does make it evasion.

I might not have made what I intended clear with my original post but if you reread now assuming that such was my intent you will see what I was attempting to convey.

Hope that makes sense now,

kind regards,

Shaun.

Peasie · Expert

I was just getting my point across that using cash doesn't necessarily mean something dodgy. Even though it was your post I was quoting it wasn't actually directed at your post - if that makes any sense.

More for if the post is read at a later date.

The bookkeeping world isn't perfect. The study materials for bookkeeping are based on everything (or it appears everything) being done on credit. Purchase orders and sales orders issued. Invoices issued and received. Suppliers statements reeceived and the client issues sales statements. There is the real world where sometimes things are bought and paid for at the point of sale. Using CASH. Personally, I hate cash and pay for everything by debit or credit card where possible. Even if it is only about £1.50. (Previously I would pay cash below a certain limit but cash actually takes longer to process in a supermarket now).

FoxAccountancyServices · Expert

Adrian99 wrote:
Thank you Michelle for the fast reply,

No client for the moment, just trying to do my books as good and legally as I can.
I am just starting on bookkeeping business step by step by putting my books in order first.

Maybe buying for them stationery and than add this to their accountancy bill could be a solution.

Have a lovely and sunny day.

Adrian

I see, Adrian :)

Well, if you decide to claim the non invoice petrol from the bank statement, it could be that, in the event of an investigation, the inspector would consider the bank statement sufficient to in appeasing him/her that the money was spent on petrol. Of course, there is no guarantee on this, but HMRC are usually reasonable. If you spent cash on the fuel and lost the receipt, I'd recommend taking the hit and omitting it.

You have a receipt for the service, so you should have no issues including that.

Its sooooo warm!! The heat from my laptop is not helping )

Shamus · Forum Moderator & Expert

FoxAccountancyServices wrote:

Its sooooo warm!! The heat from my laptop is not helping )

Got three desktops in the room one of which has a serious graphics card in it and I reccon I've lost about a stone in sweat.

I've got an air conditioner but can't use it in the computer room as it puts moisture in the air (last thing that you want around PC's) so making do with lieing back in my chair with a fan at full blast pointed at the top of my head.

FoxAccountancyServices · Expert

Oh wow, Shaun, can I come round? I could do with losing a stone! ((chuckle))

Shamus · Forum Moderator & Expert

If you do come around with all the sweating that I'm doing bring flippers and a snorkle with you.

Spamkebab · Expert

Kinky?

Peasie · Expert

I know some folk like to still wear formal clothes while working from home - but it's been boxers only for me for the past week. It is just too hot.

Shamus · Forum Moderator & Expert

Formal wear is out the window.

Its boxers at best... A definite plus for having no employee's there.

FoxAccountancyServices · Expert

Ha! From the heels in the photo, I just naturally assumed Peasie was female.... so the boxers comment threw me! (oops!)

FoxAccountancyServices · Expert

Well... its hasnt changed my opinion of ewe! ;0)

Shamus · Forum Moderator & Expert

Nope, thought that was wind but it was just the collective sign of everyone who just read the last post, lol.

my biggest mistake on here (to date, next to forgetting to mention the Annual Investment Allowance in one reply) was thinking that Frauke Golding was male. Embarrassed or what!

FoxAccountancyServices · Expert

I love a good ((((((tumbleweed))))))) moment!

Its an easy mistake to make.. but forgetting to mention AIA? Tsk tsk! ;0)

Adrian99 · Senior Member

Hello !

Thank you Michelle for the reply.
I will consider your answer and I hope they will not labelled my action as "deliberate but not concealed " :)

Wish everybody an excellent Thursday.
Weekend is coming over ! Tomorrow !

Cheers

Adrian