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Importance of making sensible estimates.
We have all had cases where clients have kept or retained proper records and where estimated expenses are included within the tax computation. At the margins sensible estimates of minor expenses are generally not an issue but when a return is largely made up of estimates or where there is no information to support the figures in it problems can arise.
In a recent First-tier Tribunal decision Perry (TC5164) the taxpayer’s expense claim comprised mainly round sum amounts which on enquiry could not be supported by evidence. HMRC did allow reasonable amounts for some expenses but the taxpayer took her case to the tribunal on the basis that she should not suffer any restriction. Not surprisingly she lost.
There are a couple of points here which may be helpful when trying to stress to clients the importance of keeping good records and making sensible estimates....
