Guest blog: Crunch Accounting
Claiming expenses is sometimes seen as a bit of a wheeze by employees of large businesses – a little freebie paid for by your employer. For freelancers or micro-business owners though, claiming expenses can help keep your business afloat.
Employees sometimes see expense claims as a bit of a pain, but it’s often the only way to avoid being out of pocket.
As with most things involving the taxman, the rules around expenses are complicated, and the job isn’t done once the returns are filed. If HMRC wants to take a closer look at your tax affairs they can go back several years, so you need to keep copies of everything related to your invoices and expenses, and that includes all the receipts for every single expense.
HMRC says that business owners should keep receipts for six years.
Should HMRC, for whatever reason, decide to investigate your business accounts they will want to see receipts for every expense claim going back as far as six years. It’s important you’re able to come up with the goods, falling foul of HMRC and not having years of receipts stored is a big no-no.
How should I store my receipts?
Surprisingly, HMRC are fairly relaxed about how you store your receipts. They don’t insist that you have boxes and boxes of physical paper receipts.
“HMRC recommend you keep all the original documents you receive. This does not mean you need to keep them on paper. Most records can be scanned and kept electronically on a computer or a storage device such as a CD or memory stick.”
Whilst you may choose to store physical copies, it’s probably advisable to have a digital version stored somewhere too. Paper has a tendency to deteriorate, or what if you had a fire or a leak and records were some somehow destroyed?
We back up our entire lives online nowadays and maintaining good business records should be no different. Having a digital backup just in case will put you in great stead should any investigational work occur to you or your business.
How can I backup my receipts?
There are several ways you can manage and backup your receipts, and with advances in tech happening faster than you can say P60, there are some great little tools on the market to help managing your expenses and receipts.
Essentially a smart file sharing and saving piece of software, Dropbox can work wonders for storing receipts. Simply take a photo on your smartphone or tablet, ensure that Dropbox’s auto-backup feature is enabled and the snap will be whisked into your Dropbox account ready for organising and filing accordingly (if you’re that organised, which we think you should be). Simple, fast and effective.
Google Drive allows you to photograph receipts on your smartphone to convert them into PDF’s and be stored in your Drive area. The scan feature is a great addition to this productivity app and means that you have a secure PDF ready and waiting for any further usage.
A smart little app that allow you to photograph and convert the image into a PDF scan, which you can save to your camera roll or email to yourself for future filing.
Receipt Bank is similar to the above, a quick snap and scan application, however the output has custom features which makes it stand out from the crowd. Receipt Bank allows you to extract important data from the paperwork and present it in a usable format, or even send it directly to any accounting software you may be using. A basic account with Receipt Bank costs £9 a month.
What about mileage expenses?
Much like all your other expenses, mileage expenses have to be kept for six years. Whilst there might not be physical records for each journey you took (most likely just for when you filled up with petrol), you’ll have to keep a log of where you travelled from and to. A spreadsheet is usually good enough – you can grab a free mileage expenses spreadsheet here.
Expertise from: Crunch Accounting