Re: invoices or not

Tim wrote:

"Ronald Raygun" wrote
It's not as simple as that.

Well it ought to be. Tax liability is based on tax law, and that
should say what is required to be able to claim a tax relief.

It does. Expenditure is allowable if it is incurred wholly and
exclusively for the purpose of the business, and there are some
extra hoops to make life more interesting which determine whether
it's allowable against the revenue or capital account.

That's probably as far as tax law goes on the matter (in a nutshell,
that is, it's no doubt a bit more involved than that). The problem
arises with what is acceptable as evidence of whether any particular
item of expenditure was incurred in the appropriate manner.

So what you appear to be saying is that anything other
than an invoice is *not* really sufficient, but that the tax
inspector might "overlook" that fact if s/he's feeling generous.

Well, there does appear to be some of that. It's not a very
satisfactory situation, but the system has to be able to deal
with people hell-bent on pulling wool over inspectors' eyes.

Worse: Even an invoice may not be enough, since (a) in the absence
of a receipt it may be argued that it has not been paid, so there is
no evidence that the expense was even incurred, and even if there is
a receipt (b) it just says who sold what to whom (and the "what" part
can be vague), and by itself it can't prove the purpose or the W&E bit.

An invoice from Kwik Fit for a set of tyres. Who's to know whether
they're really for Bob's builder's van or Bob's family car? An invoice
for a ton of granite chips. For a job, or for Bob's own drive?

.

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