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Can I Claim Business Expenses Without a Receipt or Invoice? 

The Difference Between a Receipt and an Invoice

A business receipt is a written acknowledgement of payment, received for a product or service, provided by a supplier. Receipts are not to be confused with invoices, which are legally enforceable documents used to request payment for a product or service from the buyer. Both documents are similar in that they are issued during the sales process. However, an invoice is given before the payment is received and is a payment request and acts as proof of the sale - including a breakdown of the products/services and the balance due. Meanwhile, a receipt is given after the payment has been made and acts as proof of ownership and payment - both the balance due and the amount paid for the products/services.

Why are Receipts and Invoices Needed?

HMRC generally require both receipts and invoices for various tax-related purposes. It isn't compulsory to provide either an invoice to the buyer of your product/service, both you/the business and the buyer are VAT registered. Similarly, receipts are not mandatory should the buyer of the product/service not require proof of ownership and payment. However, it is helpful and generally recommended to keep a record of both documents in order to file taxes.

The information provided on an invoice and receipt may be used to verify the legitimacy of a purchase, and claim purchases for their tax return. Specifically, tax-deductible business expenses such as insurance, software, utilities etc, can be proven with these supporting documents. It is recommended to keep an accurate record of all relevant sales invoices and receipts of up to six years - that is safe and accessible - so as to claim any business expenses from your tax return.

How Do I Claim Tax Relief Without an Invoice or Receipt?


While it is generally required to provide business invoices/receipts to file your tax return and claim expenses, there are some instances where you can claim without them.

1) You never received a receipt - if you have purchased a product related to your business online (via Facebook or Gumtree for example) or paid for the products in cash and the seller didn't or won't provide a receipt, keep a thorough record of the purchase, including what the item is, when you purchased it, the full name of the person you bought it from and how much the item cost. As long as you can satisfy HMRC by providing these details of the purchase, you should be able to claim business expenses.

2) VAT claimed on items under £25 - you should be able to claim back the VAT for small items of business expenses without any need for the receipt, so long as you are VAT registered. If you are able to calculate an estimate of how much you spent in the year, you can satisfy HMRC. Claim back VAT on business expenses without a receipt for

  • Car parking (not including on-street meter parking)
  • Phone calls (can be from public or private telephones)
  • Coin-operated machine purchases
  • Road tolls

3) Use bank statements instead of receipts - if you aren’t claiming back VAT and you paid using your business card, your bank statement can serve as proof of purchase (you cannot use this method to claim back VAT if the purchase was over £25).

4) Mileage - you can calculate motor expenses if you are a sole trader or partnership using a flat rate scheme. You can claim:

  • 45p per mile for the first 10,000 business miles and then 25p a mile for every subsequent mile - cars and vans

24p per mile for any distance - motorcyclists

  1. Home office expenses - if you're self-employed, you aren't required to send proof of expenses when you submit your tax return (although it is best to keep accurate proof and records to show HMRC if needed). If you're self-employed and work from home for more than 25 hours a week, you can claim a flat rate allowance (not including telephone and internet - which are not exclusively used for business purposes).

  2. Contractors - according to HMRC, expenses that are exclusively for the purposes of your contract can be claimed. If these expenses don't have receipts but are genuine business expenses you have actually incurred, you can potentially claim these expenses too. You should, for example, be able to claim for travel expenses on a tube that you were unable to keep the ticket or obtain a receipt for as long as you can prove to HMRC that you really did make the journey, and the journey was related to your work. 


Conclusion


Generally, it is recommended that you keep an accurate record of your business invoices and receipts for around six years from the end of the accounting period in order to file your tax return correctly and receive tax relief if applicable. However, there are a few instances whereby these documents are not required, so long as you are able to provide sufficient and relevant evidence and information to satisfy HMRC.


Do you run a small business and need further advice on filing your tax return, claiming business expenses without a receipt or any other tax-related queries? Do not hesitate to contact us here at Kubed Solutions for a free 30-minute consultation by calling 07762657277.