You can claim certain business expenses as part of your tax return.

Only some expenses are allowable. You can read our complete guide to allowable expenses for self-employed workers.

This is why it’s a good idea to keep the receipts for any purchase you make for your business. With receipts to hand, you’ll have a clear breakdown of what you purchased, how much you paid, and who you paid. This means you’ll be able to provide HMRC with the most accurate figure possible for your expenses. And if they ask you to back up your claim, your receipt will act as solid proof.

But what if you don’t have a receipt for a certain expense?

What To Do If You Don’t Have an Expenses Receipt

We can think of three reasons why you might not be able to provide a receipt for a business expense:

1. You did have a receipt, but it’s been lost or stolen.
2. You forgot to request a receipt at the point of purchase.
3. The expense is a small one, and you paid in cash (e.g. a taxi fare, or a tip in a restaurant).

If, for whatever reason, you don’t have a receipt to hand for a given expense, can you provide a bank statement instead?

On the government’s website you’ll find a general guide to keeping records for your tax returns. This guidance does seem to imply that HMRC will accept bank statements as part of a tax return, whether it’s to demonstrate income or expenditure.

This is one reason why it’s a good idea to have a business bank account. That way, all of your business income and expenditure will all be in the same place, and you won’t have to spend time working out which transactions were for your personal use.

If you don’t have a business bank account, HMRC advises that you “keep records of which transactions were personal and which were business.”

For small expenses – the sort you pay in tax and for which you might not have a receipt – HMRC advises you “make a note as soon as you can of the amount you spent and what it was for.”

What Happens If I Can’t Provide Evidence of Expenses?

The better the evidence you can provide, then the more likely it is that HMRC will accept your deductions.

HMRC may check your tax return. If they’re unsure about any of the figures you’ve included, then they may ask to see your records. And if you’re unable to provide satisfactory records, you may have to pay a penalty.

In some cases, if HMRC has serious concerns with your return and your records, then it may trigger a full investigation into your accounts.

This is why it’s vital to keep good tax records. But for total peace of mind, business insurance can cover your legal expenses in the event of tax investigations. That way, no matter what happens, you’ll be able to continue trading, and you don’t need to worry about insolvency.

At Tapoly, we specialise in bespoke insurance packages specifically designed to meet the unique needs of small businesses and self-employed workers. We offer legal expense insurance as an add-on to our self-employed professional indemnity insurance policies. You can get all the cover you need for as little as 35p a day, with no hidden fees. Head here to get a free quote online in minutes.

If you have any questions or would like to discuss your options please contact our Tapoly team at info@tapoly.com, call our helpline on +44(0)2078 460 108 or try our chat on our website.