I run an eclectic cidery business and regularly search Facebook market place for appropriate and unusual items for the public facing cidery space. These are nearly always private individual sales and ‘cash on collection only’.
Although some private sellers may provide a written receipt if asked, but it normally brings the potential sale to an end and they sell the item to someone else.
So is there a way of recording these cash ATM withdrawals from my business bank account within my accounts. Obviously I can create it as a purchase but I won’t have any receipts to tag to it. So essentially if I was inspected it would show £100 leaving the account as cash and me saying I bought that old tin sign with that money, from a stranger 5 miles away.
thank you.
I would say, ask your accountant, but he/she may says the same what I am thinking - it is very bad behaviour and you should do that. You may come away with just a few missing receipts per year (depending on the amount) and maybe you could keep a copy of the (facebook) (gumtree) webpage, name and address from the person you bought it from. But I am not sure does HMRC accept that, specially if you have lot of expenses without a receipt.
The answer is easy. If you have a business you should have an accountant. Not necessarily for bookkeeping or so, but to ask at least question like this one. And yes, you will have to pay for this. I would be surprised if anyone at this forum gives you an answer to this topic without saying “seek advice from a professional”. It is a highly sensitive topic and I can tell you from seeing a hmrc tax men who was not happy at all about missing receipts or evidence. In that case the tax liability was adjusted and that person had to pay more tax, because of missing evidence. That is the reason I said, keep a record or copy of websites/ pages (facebook, gumtree …) and name, address, phone numbers … from the person you buy something to re-sell it. But again, it is a tricky topic and you should ask a professional. I am not an accountant.
The forum is not meant to be a substitute for paid for accountancy advice.
People here can guide you as to how you process the accounting entries but what they can not do is tell you whether something is right or wrong in tax law.
If you want those kind of answers, pay a professional.
Yes - I think we may have strayed a bit here. I am in a similar position & my question is specifically HOW do you account for these items in QF when you don’t necessarily know who the seller was. Luckily my purchase was a bank transfer from the business account.
Cash withdrawals to pay for purchases should be tagged as a transfer to a cash account.
Then create a money out transaction for the purchase and tag it to a purchase receipt from the cash account.
If you don’t have a receipt, just create one and call it eBay or wherever you got it from.
With regards to proof, screenshot the conversation or the market place listing etc. The more evidence you have the better the position you’ll have in an equiry.
I agree with Paul Courtier. Take a screenshot shot of the Webpage and treat this as your Purchase Invoice and input it to your supplier account called eBay or Facebook.
When input, select the “Log Payment” option and process your payment accordingly.
Attach a copy of the screenshot to the invoice and possibly a picture of the item.
As Paul says, the more evidence you have available for HMRC then the more they will “possibly” acknowledge that it is a business transaction.