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Where Taxpayers and Advisers Meet

Advise for Friend...Lost receipts....What happens now?

taxadvise
Posts: 7
Joined: Fri Sep 25, 2015 9:30 am

Advise for Friend...Lost receipts....What happens now?

Postby taxadvise » Fri Sep 25, 2015 9:44 am

Hi everyone,

Thanks for a great forum. My friend has had a property on rent for about 7-8 years. About three years ago, he claimed a large loss of approx £25k due to having a lot of work done on the property as tenants had done major damage to his property and then ran off without paying rent. He's now received a letter from HMRC (must be a random audit?????) asking that he shows proof of receipts of the work he had done then.

To make matters worse, he had a mental health breakdown about two years ago due to family bereavement and has been very unwell since then...he has now looked around everywhere and can't find the receipts and believes he's misplaced them.

I'm going to be honest and say that he is extremely stressed and panicky as he's worried he's going to get either a massive fine/prison or both and won't contact HMRC...basically he's burying his head in sand.

As a friend I decided to write on his behalf....what can he do? What is the worse case scenario? i.e. is he looking at a fine or imprisonment?

Any help and advise would be greatly appreciated.

Peter D
Posts: 10668
Joined: Wed Aug 06, 2008 3:37 pm

Re: Advise for Friend...Lost receipts....What happens now?

Postby Peter D » Fri Sep 25, 2015 10:06 am

Contact the companies that did the work. They may still have records. Regards Peter

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Advise for Friend...Lost receipts....What happens now?

Postby section 44 » Fri Sep 25, 2015 10:12 am

Has he contacted the contractors for a copy of the invoice/receipt?

If he paid otherwise than by cash, has he checked bank statements (if necessary requesting copies from the bank) of payments made?

If he paid by cash then do his bank statements show corresponding cash withdrawals (I'm assuming that your friend' life style isn't such that he ordinarily carries £25k around as spending money)?

In the meantime he could practice retrieving the soap from the shower floor using his feet ... just in case

taxadvise
Posts: 7
Joined: Fri Sep 25, 2015 9:30 am

Re: Advise for Friend...Lost receipts....What happens now?

Postby taxadvise » Fri Sep 25, 2015 10:24 am

Contact the companies that did the work. They may still have records. Regards Peter
Has he contacted the contractors for a copy of the invoice/receipt?
If he paid otherwise than by cash, has he checked bank statements (if necessary requesting copies from the bank) of payments made?

If he paid by cash then do his bank statements show corresponding cash withdrawals (I'm assuming that your friend' life style isn't such that he ordinarily carries £25k around as spending money)?

In the meantime he could practice retrieving the soap from the shower floor using his feet ... just in case
Thanks for your prompt replies guys.

@ Section 44 - As much as I appreciate your help there is no need to say nasty stuff like that. He lost his family member and became severely depressed. Does that mean he deserves the worst punishment and comments like yours??? Please refrain from such comments.

Before he became ill, he was a DIYer himself and a moderate amount of work was carried out by himself... He has already contacted the 2 companies that carried out the work for him...the one that cost him approx £2-£3K, said they will check their records and contact him...the 2nd one that he paid the most to(approx £15k) for new roof, gutting the house, replastering etc, is now insolvent.

FYI, he paid everything in cash, but it was stretched over a long period of time, so he might be able to show some, but not all money.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Advise for Friend...Lost receipts....What happens now?

Postby section 44 » Fri Sep 25, 2015 10:46 am

perhaps whilst looking for receipts you could also search for your sense of humour

taxadvise
Posts: 7
Joined: Fri Sep 25, 2015 9:30 am

Re: Advise for Friend...Lost receipts....What happens now?

Postby taxadvise » Fri Sep 25, 2015 10:53 am

perhaps whilst looking for receipts you could also search for your sense of humour
I understand sense of humour, but there is a time and place as I'm talking about a very close friend of mine whom is on the verge of severe mental health breakdown again...what sort of a friend would that make me if I'm taking the mickey behind his back?

I understand you have no relation to this gentleman, but all I ask for a bit of empathy and understanding.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Advise for Friend...Lost receipts....What happens now?

Postby section 44 » Fri Sep 25, 2015 10:56 am

...clearly nobody is going to prison

taxadvise
Posts: 7
Joined: Fri Sep 25, 2015 9:30 am

Re: Advise for Friend...Lost receipts....What happens now?

Postby taxadvise » Fri Sep 25, 2015 10:59 am

...clearly nobody is going to prison
Thank you for clarifying that mate. What can he do if he has lost the receipts and still can't find them? What would the taxman do? Would they fine him? What about his mental health status? Would they take that into consideration?

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Advise for Friend...Lost receipts....What happens now?

Postby King_Maker » Fri Sep 25, 2015 12:21 pm

The "worst case" scenario is likely to be to disallow all the non-receipted expenditure. The associated increase in profit and tax liabilities could lead to interest and penalties thereon.

In the absence of fraud, a custodial sentence is highly unlikely.

taxadvise
Posts: 7
Joined: Fri Sep 25, 2015 9:30 am

Re: Advise for Friend...Lost receipts....What happens now?

Postby taxadvise » Fri Sep 25, 2015 1:53 pm

The "worst case" scenario is likely to be to disallow all the non-receipted expenditure. The associated increase in profit and tax liabilities could lead to interest and penalties thereon.

In the absence of fraud, a custodial sentence is highly unlikely.
Thank you for the clarification kingmaker. So if they disallowed £25k as expenditure, assuming there were no penalties/interest, what amount of tax would be charged?

Also what are the usual penalties?

Lastly would any health issues be taken into consideration?


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