Eastern European Traders

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To all Traders and Accountants
Ever dealt with or represented an Eastern European client or clients? Well, I do.
I was recently approached by a trader and asked to prepare his accounts and tax return 2008. “Not difficult,” I thought. I requested from him his books and records (standard procedure).
However, he then dropped his bombshell. “In my country,” he explained, it is not necessary to keep an “audit trail.”
“What does this mean,” you ask? No bank statements, cheque books, paying in books, purchase or sales invoices?
Why, why, why? I asked.
“In my country, it is not necessary:” and so it proved to be right.
So, I explained to him that in England it’s all different. You must keep all verifiable evidence. Therefore, you must keep all bank statements, paying in books, cheque books and, most importantly, all purchase and sales invoices and to mark on each payment option i.e. card or cash?
“Oh,” he nearly exploded. Therefore, it got me thinking: something I do a lot, but late at night.
How would you not just prepare but justify to an Inspector of Taxes if documentary evidence is not kept.
Try photographing all fixed assets, like computers, power tools (if a builder) and car. This sounded promising.
Try to obtain (honestly) independent signatures (with accompanying names and addresses) of verification.
If a builder, obtain a signed letter from the contractor (if not domestic) that tools must be supplied by the trader.
If domestic, then ask customers to write letters that said tools have been seen to be used.
What about renewables like postage for letters, petrol for cards, envelopes?
Its been my experience that inspectors acknowledge that these expenses must have been made (all cars as far as I know (lets exclude electric-I have never seen one) use fuel) and letters cannot be sent without postage or an envelope (surely everyone would agree with me on that one).
What happens if, though, you have a difficult inspector? Try pleading or ask for a collage of his/her to review.

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