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Where Taxpayers and Advisers Meet

Buying a laptop for cash

jtufty
Posts:34
Joined:Sun Jan 13, 2013 12:51 pm
Buying a laptop for cash

Postby jtufty » Sun Dec 27, 2020 2:17 pm

Hi,

I am a freelancer.

I desperately need to upgrade my laptop to a high spec one (Im a graphic designer, so need a powerful laptop). I was chatting to a 'friend of a friend' the other week and theyre selling one. Its far cheaper than if I got the equivalent brand new. Its a very good deal. However, he will only accept cash. (I dont know why, he's not self employed or anything). He even seemed reluctant giving me a receipt.

I really dont want to miss this opportunity, but I obviously want to claim it as an expense (its £800). Whats the least I need to do to evidence that its a valid expense to the tax man? Is a reluctant hand-scrawled receipt enough? Or would that likely be a red flag to a tax inspector!?

Thanks

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Buying a laptop for cash

Postby robbob » Mon Dec 28, 2020 3:55 pm

Is a reluctant hand-scrawled receipt enough
Thats perfectly acceptable as long as it contains the main details - being date - seller details and description of goods being sold - with signature too.

The thing with cash is its hard for you to prove at a later date that the transaction is real and kosher.


You are 100% fine to proceed along the standard rules and claim the expense like any other expense , however you really must be willing to provide details of who you paid to hmrc if requested - when you paid them and why - to keep proper business records the lack of a receipt for cash paid detailing the individuals home address details and descrption of goods sold is very unhelpful in that regard. Ok if its one or two minor items per year i don't think that would be an issue but a cash payment to an unverified source really has no element of proof that the transaction existed. You do have some proof in that the laptop exists - but its only right and proper that for hmrc to allow you a tax deduction the details of the recipient should really be made available - so that if hmrc so chose they could question that person as approrpiate. As you say its your friend being awkward here when i suspect they have nothing to worry about - perhaps they are wrongly worried that the dispsoal may have tax implications for them - as long as its personal purchase and personal disposal they should not have any worries in that regard. So hopefully their hand scrawled receipt will contain relevant approrpiate info that is legible.

jtufty
Posts:34
Joined:Sun Jan 13, 2013 12:51 pm

Re: Buying a laptop for cash

Postby jtufty » Fri Jan 01, 2021 9:09 am

Thanks @robbob . My accounts are pretty simple: I keep a spreadsheet of my income and any expenses that I incur. Any paper reciepts (for petrol for example) I keep and all digital receipts/invoices I keep a record of.

So having a hand-scrawled receipt which I have to use cash for is less than ideal. (I like to have everything nice and tidy!). But its a good deal.

I think he is concerned

As you say, should HMRC choose to take it up with him then so be it. As long as I can evidence that I paid cash in good faith for an item from a named person on a certain date.

Thanks


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