Tax Tip No. 312 - Cash Expenditure

Talking about the car wash, yeahTalking about the car wash, yeah

I visited my local car wash this week, and they showed me a large screw in my offside rear tyre. So, I asked if they could repair it, and they said yes.

Now, this is an establishment where the work costs peanuts. The workers are all of eastern European extract, and cash is very much the expected medium of payment. I have in the past asked for a receipt for a new tyre, and they took several minutes to find some dusty old sales invoice folder, that clearly had not been used for months. A debit card I once offered was greeted with a shake of the head. So, this time, I knew the score ...

It’s not my place to worry about whether they are disclosing this income to the taxman or not – that’s their issue. But I do care that I get to claim tax relief for my outlay. HMRC say that there should be sufficient back-up evidence for all items of expenditure. The definition of what is considered sufficient can be a slightly grey area, and usually depends on the type and level of expenditure, but the specific HMRC guidance is this:

… Sometimes you may not get evidence such as a receipt for cash expenses, especially where the amounts are small. If this happens, you should make a brief note as soon as you can of the amount you spent, when you spent it and what it was for ….”.

Which meant that while I was sat in what passes for a waiting room, I used my iPhone to send an email to myself: -

[Date – Per Email]

XXXXXXXX Car Wash and Tyre Centre

  1. Car Wash (In/Out)
  2. Remove wheel, extract screw from off-side rear tyre, plug and re-fit

Cash £17

Of course, the situation is different in respect of VAT under the standard rate scheme. All items of expenditure where you have suffered VAT should have the appropriate VAT receipts attached to them if you wish to reclaim the VAT under the standard rate scheme, and HMRC will routinely disallow VAT reclaims where they find missing receipts. However, keeping a brief note will at least enable you get a tax deduction. After all …

“… You might not ever get rich
But let me tell you it's better than digging a ditch …”!