As you can imagine, I get lots of paper arrive via the postman (I’ve yet to have a postwoman), and in it are loads of receipts that the client expects i can create a set of books and then accounts from them. Well – that is my job. But sometimes it is hard to explain what an appropriate receipt is in case their tax return is pulled up by HMRC for inspection. It’s worse still if the client is VAT registered, as not only do you have to have an appropriate receipt, it needs to be a VAT receipt.
Just a wee bit of advice below on what you need to provide either your bookkeeper, accountant or me, or if HMRC want evidence of costs. It is relevant for the self employed and limited companies, so buckle up – it is only a short one !
And here is the transcript if you would prefer to read the text.
People ask me about credit card receipts and debit card receipts. Well, they are not really an allowable receipt for your business. The reason being is there’s no detail on what was purchased, there’s no evidence that the purchases are wholly and exclusively for your business and if you’re registered for VAT there’s no split on the VAT account. So really, using your debit or credit card receipts is not a very effective accounting, bookkeeping you need. What you always need to do is make sure that when you go into a store, you get a proper till receipt or a proper itemised receipt that you use for your business.
Now if you’re using an online accounting system then you need to make sure you only take the picture of the full receipt and not the debit card because the systems going to think they’re two different receipts and it’s going to book it twice. Me as an accountant, when I get a shoebox of stuff, the first thing I do is put everything into date order and match the two credit cards and the debit card receipt to the actual receipt. It takes a lot of time, your paying an hourly rate, so it’s something you can probably do yourself.
I always advise, match the credit card receipt to the actual receipt, only put through the actual receipt for your bookkeeping and then if you do spend cash, separate it out. So yes, debit card receipts you can use but please always, always, always collect the proper receipt, especially if it’s something for entertaining or subsistence. If I see a receipt for the Mcdonalds say, for £30, I know it’s really not just for you, unless you’re very, very hungry. The debit card receipt for that goes straight to entertaining. So ignore the debit card and credit card receipts, go for a proper receipt, use those in your bookkeeping.