A question received by email:

I’m working as a yoga teacher, and wondering what I do about class receipts.  I’m just starting out, and the advice on HMRC is that you need invoices or receipts for all payments received/expensed, but I don’t know a yoga teacher who does receipts for anything! Can you help with how to tackle this?

And our reply:

HMRCs advice is sometimes over simplified.

In terms of money in from students for classes, etc, there is no obligation to issue receipts.  Never has been and you are right no one does this.  The only time I issue anything is if a student requests it.

The obligation you have for money in, is to keep an accurate record of what you receive – and this can be a pitfall for some teachers who get in a muddle.  So long as there is a robust income recording system, all will be fine.

In terms of money out for your expenses, the requirement is to be able to evidence all expenses.  If you can get a receipt / invoice, then do so.  If not, evidence could be a credit card statement or bank statement.  Finally, if you spend cash on small items, eg a coffee whilst travelling on business, then a contemporaneous record – I send my self and email – is just fine.

30 years in accounting, I’ve never known HMRC refuse genuine expenses for lack of invoices / receipts, but don’t be complacent and cover as many expenses with documentation as you can.

I hope this helps.