When you’re running a business, it’s likely that you will incur costs that you can claim tax relief on by reducing your taxable profit. But when you’re recording these expenses, do you have to keep paper copies of all your receipts, or will HMRC accept scanned copies?
The good news is that in most cases, HMRC will indeed accept scanned copies! However, there are a few things that you need to keep in mind.
The exception to the rule
Naturally there has to be an exception, and that is when you receive documents that show tax that isn’t VAT - for example, bank interest certificates, or dividend vouchers. These documents have to be kept in their original form - so that means that if you receive these in paper format, you’ll need to retain that paper.
If, however, you receive these documents in an electronic form (for example, you’re emailed a .pdf dividend voucher by a company in which you own shares), you can keep that .pdf file - you just can’t change it to another format, like an image.
Don’t forget the back of the receipt!
Also, when you’re scanning your documents, if you receive a document that has information on the back as well (such as a bill with terms and conditions on the back), then you have to scan both sides.
Managing your scanned receipts
To scan your receipts, consider investing in a scanner such as Doxie, which is small, can work wirelessly, and produces manageably small file sizes. Alternatively, you could even send your receipts to a service like Receipt Bank and let them do the scanning for you.
To make it easy to find your receipts later on, set up a structured folder layout that will be easy to keep up-to-date. For example, if you don’t have many receipts in a year, you might create a subfolder for each supplier to save your receipts into. If, however, you need to store a lot of receipts, you might find it easier to create a folder for each year, then subfolders for months, then save receipts into subfolders by supplier.
Use a backup service
HMRC require you to retain your records for a number of years (Limited Company requirements are here, and self employed requirements here), so when you scan receipts, you should be confident that they’re backed up securely. You can use a service like Deposit to back up those folders online daily.
Are pictures of receipts ok for taxes?
You don’t have to scan - take a picture instead!
Don’t forget that managing your receipts doesn’t have to be about sitting at a desk and scanning pieces of paper - you could also snap a photo of that receipt on your smartphone as soon as you spend the money and then upload it into your accounts later.
And if you’re using a cloud accounting system, check whether it is mobile-optimised. If so, you maybe able to just attach the receipt image to your expense entry while you’re on the go, which will save you even more time.
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Emily Coltman FCA is Chief Accountant to FreeAgent, who provide the UK’s market-leading online accounting system specifically designed for micro businesses and freelancers. Journey further...
