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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: business records checks: at the visit: business expenditure

Business expenditure may include purchases of goods bought for re-sale, the purchase of a business asset (such as a car) and business overheads and running costs (for example rent, staff costs, fuel).

The approach to maintaining records should be sufficient for the purposes of ensuring that amounts expended are adequately recorded.

If negligible items of expenditure are not recorded and the business does not intend to make a claim for these expenses for tax purposes, we will not usually consider the records to be inadequate. Businesses may, for instance, choose not to claim some minor costs as the time involved in doing so may be disproportionate to the amounts involved.

We expect all customers to maintain adequate records and therefore submit accurate returns. Customers should be made aware that, in the event of expenses being under reported, they may become liable for more tax than is strictly due. The onus, and the resulting risk, falls on the customer to ensure that expenses are indeed fully reported.

See COG940300 for examples of adequate records of business expenses.