TSCB 5: When and how to claim Expenses

The last post covered the basic technical principles behind what type of expenses are claimable and why they might be disallowed for tax purposes. This article covers how to work out when you can claim a (revenue) expense, & how much detail you need to give HMRC about your expenses in your tax return.

To work out your business income & expenses you can’t just look at the actual cash position – the money you received and the money you paid out (‘cash basis’ in accounting speak). You also have to look at money that is owed to you, or you owe others at the end of each Trading Period at your business’ year end (‘Accruals Basis’ in accounting speak).

Some expenses examples of this would be if

• you’ve ordered and received some raw materials but not paid for them yet (you need to make an Accrual adjustment), or
• where you’ve paid for something you haven’t had yet, like the line rental on your home telephone (you need to make a PrePayment adjustment).

This article explains what happens to those sort of expenses that are hanging over from one year to the next.

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