the legislation concerned is as follows:-
Duty to keep accounting records.
(1)Every company must keep adequate accounting records..
(2)Adequate accounting records means records that are sufficient—.
(a)to show and explain the company's transactions,.
(b)to disclose with reasonable accuracy, at any time, the financial position of the company at that time, and.
(c)to enable the directors to ensure that any accounts required to be prepared comply with the requirements of this Act (and, where applicable, of Article 4 of the IAS Regulation)..
(3)Accounting records must, in particular, contain—.
(a)entries from day to day of all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place, and.
(b)a record of the assets and liabilities of the company..
(4)If the company's business involves dealing in goods, the accounting records must contain—.
(a)statements of stock held by the company at the end of each financial year of the company,.
(b)all statements of stocktakings from which any statement of stock as is mentioned in paragraph (a) has been or is to be prepared, and.
(c)except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified..
(5)A parent company that has a subsidiary undertaking in relation to which the above requirements do not apply must take reasonable steps to secure that the undertaking keeps such accounting records as to enable the directors of the parent company to ensure that any accounts required to be prepared under this Part comply with the requirements of this Act (and, where applicable, of Article 4 of the IAS Regulation).
There is nothing in S386 that says what the HMRC officer seems to be reportedly saying and I trust that putting them to pointing out exactly where there is not an adequate record showing the claim and reimbursement of the £1,200 to the director should suffice to either get them to withdraw such a stance or allow the director to provide evidence - from diaries/letters/notes of meeting etc - to prove the claim.
regards and hope this helps
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