It’s about evidence. If you get a tax enquiry, HMRC could ask a question like this:
“Please provide supporting invoices for the expenditure listed in Repairs and totalling £3,567.”
So you bought the office equipment via Ebay. You know what it’s for, you know it’s genuinely tax-deductible, but can you find the paperwork?
You see in your PayPal account a payment to Dodo1968. That doesn’t even tell you the name of the Ebay shop – finding the information in retrospect is difficult.
HMRC know this. HMRC accept that you did spend the money, but that’s not the point. Before they will allow the tax relief, HMRC wants evidence that you spent the money for a tax-deductible reason.
Yes, you’re particularly busy, but you’ve got to find the evidence for your accountant. The alternative is to give up and just pay the £700 tax.
Press PRINT before BUY
You should have a PDF printer on the PC. In this age you cannot expect to go through daily business life without being able to record what you do on the net – just about everyone else is recording what you do, so you might as well too!
Then you save your PDFs in a folder where you can find them later. Give it a date and brief description. It doesn’t take long.
If your people do the accounting for you but – typically – you made the purchase but you forgot to take a PDF copy, then would you give your people your Ebay or PayPal passwords? Then they can take PDF copies of whatever they need as they edit your accounts software. Of course we’re not really suggesting that you give your online account details to someone else…
The supplier should send you an email confirmation – that’s another way of saving the evidence. You can print this and give it to your accounts people. This isn’t always convenient if you use a “disposable” email address for internet purchases, to reduce the spam sent to your mailbox. You might have to login into another email account to get the confirmation, so that’s why we think the PDF route is the best.
AKA “Virtual printer”. On your PC it appears in the same place where you choose which printer to send to. There are plenty of free PDF creators to be found on the net, and we’re not going to recommend any, just be careful not to install any adware that comes with it. For more security and no adware, you can buy (download) a PDF printer quite cheaply.