A HM Revenue and Customs (HMRC) alert has been issued and it comes after an annoucement was made regarding those earning above £50,000. Whilst the advice doesn’t affect everyone, it’s crucial to verify whether you’re eligible to reclaim money, as one woman has highlighted the vital importance of tracking what you’re owed.
Small business accountant Lindie J has shared essential advice for those potentially entitled to additional funds, explaining how individuals could end up paying HMRC more than necessary. It’s particularly noteworthy as there are numerous expenses you can claim for, with drivers having previously discovered they could be overpaying unnecessarily.
Lindie warned: “Not keeping receipts is like trying to claim on insurance without proof. No evidence, no payout. Be honest with me, where are your receipts right now?
“The subscription invoice, the receipt for your new business phone, the train ticket, even the mileage log – that mileage log. Are they stuffed in a bag, fading in the glovebox or buried somewhere in a shoebox or somewhere where you don’t really know?
“I get it. You’re busy running your business, serving clients, juggling family and the last thing on your mind is a little bit of paper but, here’s the thing, not keeping receipts is like trying to claim on insurance without proof.”
She added: “HMRC, they can disallow those expenses and hit you with a higher tax bill. That’s why I always say make it easy for yourself. Snap the receipt as soon as you get it, and you’re done.”
Should you prefer not to accumulate them in a heap or shoebox, she mentioned there are digital applications available to store them all collectively in one location. This naturally makes perfect sense, given that numerous receipts are electronic nowadays.
For individuals eligible to claim business-related expenses, she emphasised it’s crucial to understand this, as it could determine whether you save money or miss out. According to Lindie, it’s absolutely essential information to bear in mind.
What you might not realise is that HMRC can raise your tax bill if you’re unable to supply receipts, or alternative valid evidence, for expenses you’ve claimed. Should you operate as a sole trader or limited company and HMRC launches an investigation into your tax return, you must demonstrate that all business expenses you deducted were legitimate.
Should you lack adequate evidence, HMRC possesses the authority to dismiss your claimed expenses. This results in raising your taxable profits and, consequently, amplifying your tax obligation.
The HMRC website declares: “If you prepare accounts for your business, you will need to choose the dates you keep records to and from. This would usually be the same dates each year.
“It may be easier to complete your tax return if the dates match the tax year (6 April to 5 April). This is because HM Revenue and Customs (HMRC) works out tax based on the tax year.
“If your accounts do not match this, you will need to allocate profits to two different accounting periods. If you do not prepare accounts, you will need to record your income and expenses for each tax year (6 April to 5 April).”
HMRC states you must maintain records of:
- All sales and income
- All business expenses
- VAT records if you’re registered for VAT
- PAYE records if you employ people
- Records about your personal income
- Your grants, if you claimed through the Self-Employment Income Support Scheme
For additional comprehensive details, check the website, which provides extensive guidance on expense recording procedures.