Scanned receipts and invoices: HMRC requirements

With the explosion of technology we often get asked whether HMRC will accept scanned receipts and invoices.

Well, the goods new is that yes, subject to certain rules, HMRC are more than happy to accept scanned and digital copies of paperwork - including scanned receipts and invoices.

So what do you need to be aware of if you're thinking of switching to a more environmentally friendly (and usually less expensive) way of running your business.

Scanned receipts and invoices: HMRC requirements

Well, firstly there's an exception to this rule. If you receive a document which includes a tax which isn't VAT (for example bank interest certificates and dividend vouchers) then you must keep these in their original form. However this means that if you receive these as a pdf you won't need to print and keep these - just simply keep the original pdf (but don't change the file format, for example to a jpg, as this won't be allowable).

If you decide to keep scanned receipts and invoices electronically then there are some rules which HMRC require you to follow:

As with hard copy documentation, HMRC require you to keep at least 6 years electronic archived documentation.
You may need to keep your records for longer than 6 years if any of the following apply:
a transaction covers more than one accounting period
the business has bought something it expects to last more than 6 years eg a piece of machinery
HMRC has started a compliance check into your business tax return
you sent your tax return in late
Legibility - you should ensure that all scanned receipts and invoices kept are totally legible (eg jpgs, pdfs etc)
You should be able to easily locate any document required by HMRC

Scanned receipts and invoices: What do you need to do?

Well, for a start you should either invest in a good quality scanner (or make sure your photo taking is up to scratch!) or consider using a company like Receipt Bank to do your scanning for you. The great advantage with Receipt Bank is that if you're using online software (we use Xero and FreeAgent) then it will probably publish any invoices and receipts directly to that software.

And don't forget the back of any receipts you're scanning or photographing - if you receive a document with information on the back as well (for example terms & conditions) then you'll need to scan both sides.

Your electronic record keeping should also be well organised so that you can easily find an invoice if HMRC request it. Think about your filing structure - you might want to organise this by supplier or by month.

And one question we're often asked is "Should I keep a copy of any paper receipts that I receive?" Well, that depends on how many you receive and how good you are at filing - both electronically and in paper format. In our practice we only have about 2 paper invoices or receipts a month and we use Receipt Bank to process these - so we don't keep any paper. But as well as sending any documents/pdfs we receive to Receipt Bank we also file any emails we receive which have invoices attached as pdfs so we can easily find these if we need to.

What we certainly wouldn't recommend is printing out receipts or invoices which you receive in pdf format - again, just make sure you can easily access the message with the pdf attached and/or the pdf itself.

And finally, make sure you back up your data regularly - even if you use an offline storage facility like Dropbox. You don't want to end up with the situation where you lose all your online receipts!

If you follow these rules, you shouldn't have any issues with HMRC. But be warned, if you are lax with your bookkeeping and record keeping (whether you're doing this in paper format or electronically) HMRC can fine you up to £3000!

And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].

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