Do you keep receipts?

[Light_Box]

Hi all. I thought I'd ask another question as you've been so very helpful over the last week. We have two umbrella companies on our preferred suppliers list that tell our contractors that they don't need to keep receipts. The other three tell them that they do need to keep receipts. Can you please let me know what the actual position is regarding receipts as I'd like to ensure are contractors are given a consistent message.

Many thanks again
LB

[Beefy198]

Are you reading their language correctly? In my experience there's three types of umbrella companies:

1) You need to keep receipts
2) You don't need to show us receipts
3) You don't need receipts, we have a dispensation!

One, and to a degree two, are correct. You always need to keep receipts. Sometimes an umbrella doesn't need to see them, but you still need to keep them.

And that's the problem - companies in bracket two don't always explicitly STATE that you need to keep them. It's more of a "read between the lines when we tell you that you must be able to prove all your expenses, but we don't need to see receipts"

Still with me? So sometimes it's worth just asking about their policies towards receipts, as the marketing material and website gumpf isn't always crystal clear.

As for companies in bracket three, steer well clear.

[Malvolio]

Originally Posted by Light_Box

Hi all. I thought I'd ask another question as you've been so very helpful over the last week. We have two umbrella companies on our preferred suppliers list that tell our contractors that they don't need to keep receipts. The other three tell them that they do need to keep receipts. Can you please let me know what the actual position is regarding receipts as I'd like to ensure are contractors are given a consistent message.

Many thanks again
LB

If the umbrella want to work without receipts, that's their problem. However there needs to be an audit trail back to the original expenditure. Therefore, all contractors should keep all receipts for up to 6 years, just in case HMRC decide to mount an audit either on the umbrella or onthe contrator's P11D

And I would suggest if your umbrellas are suggesting otherwise (a) they are clearly wrong and are probably working the usual flanker on expenses as income and (b) you should drop them now and stick with the ones that tell the truth.

HTH

[Pistachio]

Originally Posted by Malvolio

If the umbrella want to work without receipts, that's their problem.

Not entirely though, is it? I've read one website where they literally said "the buck stops with us!"

But who are HMRC going to chase? Once the directors have buggered off to a sunny destination somewhere it will be the contractor footing the bill for sure.

[Bel]

I always operate on a 'just in cases' basis. Just because a service provider says that I don't need to do something, I do anyway, just in case I regret my decision later on. My decisions would always be based on how long tax investigations can go back, not what a service provider tells me. Ultimately, we're held responsible for how we manage our tax affairs, no-one else.

I even keep old receipts for my own goods too. I recently sold two handbags on e-bay that I bought in 2002/3. I'm sure that displaying the photographed receipt helped to sell them at a higher price because there are so many fakes on there.

[monstro]

to be honest any umbrella that tells contractors they don't need to keep receipts is being dodgy quite frankly.

As Malvolio says, you need an audit trail for Hector's goon squad going back 6 years. So for a brolly to say you don't need to keep these is more than likely playing the dodgy 'claim £30 for breakfast' dispensation game.

Either that or it's a schoolboy error. In any case not that encouraging.

[Pistachio]

I should have stated to avoid doubt:

Anyone that doesn't keep receipts is an idiot.

No charge.

[Rob Crossland]

Originally Posted by Light_Box

Hi all. I thought I'd ask another question as you've been so very helpful over the last week. We have two umbrella companies on our preferred suppliers list that tell our contractors that they don't need to keep receipts. The other three tell them that they do need to keep receipts. Can you please let me know what the actual position is regarding receipts as I'd like to ensure are contractors are given a consistent message.

Many thanks again
LB

Your PSL questionnaire should enquire about this and it's great you care about compliance. Many don't.

A dispensation is simply an administrative aid for employers by which p11d requirements are reduced. It should not be used as a sales tool (take 85% home with HMRC approved expenses) nor reduce the need for the individual to not wholly and exclusively incur true business expenses. It simply means that the employer (umbrella) does not need to report the detailed lines of expense by means of a p11d. The employer can still ask for proof of expense being incurred (and should) and the employee (contractor) should retain receipts to prove this is the case.

A properly constituted and audited Umbrella will have this principal at the core of expenses plus assignment validity checking (can a person claim expenses and/or are they subject to 24m rule).

Hope this helps,
Rob

[Pistachio]

Rob,

Not being too picky here (because despite being a miserable ******* I'm quite impressed that the MD of a brolly has the balls to openly post here). But isn't it in your interests to state that on your website?

I had a quick poke around and it took me a while to find an exact statement on expenses. Here it is:

There are other conditions around being able to claim expenses and we go through these in full with a Contractor to ensure they are well informed.

For contractors using Parasol we offer an 'expense dispensations’ that saves time with administration (but should not allow expense claims that are not actually spent).

...whilst you correctly state that contractors shouldn't claim for expenses they didn't incur, surely a dispensation doesn't save them any time what so ever? So why mention it at all?

[Rob Crossland]

Originally Posted by Pistachio

Rob,

Not being too picky here (because despite being a miserable ******* I'm quite impressed that the MD of a brolly has the balls to openly post here). But isn't it in your interests to state that on your website?

I had a quick poke around and it took me a while to find an exact statement on expenses. Here it is:

There are other conditions around being able to claim expenses and we go through these in full with a Contractor to ensure they are well informed.

For contractors using Parasol we offer an 'expense dispensations’ that saves time with administration (but should not allow expense claims that are not actually spent).

...whilst you correctly state that contractors shouldn't claim for expenses they didn't incur, surely a dispensation doesn't save them any time what so ever? So why mention it at all?

I think we could fix that by stating that it saves us (Parasol) time and the Contractor as P11d would need to be produced (several thousand in our case) which is a cost that would have some proportion passed on and be some form of admin on the Contractor. If no dispensation we would require ALL receipts ALL the time and surely not having to do that in this regard is an advantage to the contractor without being ott in claim (may be only marginal) ?

We do not say don't keep receipts and claim for anything - we also check EVERY claim and carry out further random checks on non-receipted items to ensure receipts are available.

I think you made a fair challenge and if there was a level playing field we could all be much clearer.