payment for commercial vehicle's service but no receipt

knowledgeispower

Hi,
I am about to take on a CIS registered subcontractor who has a van, and has been getting his van serviced by his friend. He has no receipt for these and has nothing showing on his bank statement. He told me that as far as he knows he can submit these as expenses up to £5000 pa. I have never heard of this before, I thought everything has to have some kind of receipt etc. Can someone confirm please?
Many thanks in advance

knowledgeispower

Thank you mrme89. Yes running cost method. No, he only wants to claim what he spent, he has invoices for the parts bought, but not for the labour bit, as the friend is fixing cars as a hobby- for friends only (it's not his main job).

MarieNoelle

mrme89 said:

If he wants to claim for labour, he will need an invoice.



£5000 is an awful lot for servicing!

I thought the same. The "friend" may need to consider whether his job on the side is really a hobby!

knowledgeispower

Thank you for all the comments. I didn't make it clear, sorry, he did not spend £5000. someone told him that he can claim up to £5000 on anything without receipt. i.e materials, tools bought second hand etc. so he does not want to claim £5000 for service, only a few hundred £(it's not a new van). thanks again :-)

knowledgeispower

so that was my question, really, whether he can claim that few hundred without receipt?

MarieNoelle

knowledgeispower said:

so that was my question, really, whether he can claim that few hundred without receipt?

The test would be if he can convince a tax inspector that the expense has genuinely occurred and it is wholly and exclusively for the business. Easier to prove with a proper receipt. A record of what was spent, when and how much may satisfy HMRC as well as a physical evidence of the items bought (i.e. a tool ).
I suspect he has heard that a claim of £5000 for expenses is ok because at that level it may be a reasonable guess. However this is a risky approach as in case of inspection he would have to prove how he came to that amount.

knowledgeispower

Thank you so much MarieNoelle. I said the same thing to him but he was going on about how another accountant told him he doesn't need a receipt up to £5k :-/
anyway I will ask him to at least record it and see if the 'friend' can give him something like a note at least to say how much was spent on service.
Thank you again to everyone's responses :-)