I can already see that you spent £47.82 at Screwfix on Tuesday.
It’s right there in the bank feed – the money left your account, I know who you paid and I know how much you spent.
So why on earth am I asking you for the receipt as well?
It’s a perfectly reasonable question. Unfortunately, the answer is that the bank transaction only tells me that money moved. It doesn’t tell me what actually happened.
A payment isn’t the same as a purchase
Let’s stick with that £47.82 Screwfix transaction.
You might have bought some tools for the business, materials for a particular job or safety boots. There could be several different things on the same receipt.
You might even have returned something at the same time, used a credit note or accidentally put something personal through with the business purchase.
All I can see from the bank is:
Screwfix – £47.82
That’s enough for me to know where the money went. It isn’t necessarily enough for me to know how it should be recorded – the receipt fills in the missing bit.
Then there’s VAT
If you’re VAT registered, the paperwork becomes even more important.
Seeing £47.82 leave your bank account doesn’t automatically mean I can treat part of it as VAT and reclaim it on your VAT return. I need to know whether VAT was charged, how much was charged and have appropriate evidence to support the claim, and unfortunately, I can’t work that out reliably from the amount or the name of the supplier.
Even businesses that normally charge VAT can sell things with different VAT treatments – Screwfix for example sell safety footwear which is zero-rated for VAT, whereas a tube of silicone attracts 20% VAT. A payment showing up in the bank isn’t evidence on its own that a particular amount of VAT can be reclaimed.
So when I ask you to find an invoice or receipt, I’m not just trying to make your bookkeeping beautifully documented. It is likely that I need the information that’s on it.
But surely some transactions are obvious?
Of course! If you pay the same supplier £30 every month for the same service and I’ve got the necessary information about that arrangement, I’m not going to pretend I’ve never seen it before every time it appears.
Good bookkeeping involves judgement, but there’s a difference between making a reasonable judgement based on information we already have and guessing what somebody bought because the retailer’s name looks familiar.
If I’m pestering you for the receipt, there’s generally a reason – something about that transaction isn’t clear enough from the information I have.
