Purchase receipt: what it must show to claim an expense

A purchase receipt is a document a seller gives a buyer to confirm that a payment for goods or services was received. If you are the buyer and need to claim the cost as a business expense, the fields, the worked example and the record rules below show what the receipt has to carry.

This guide covers the buyer's side in the United States, the United Kingdom and Germany. It does not give tax advice for your own situation.

What is a purchase receipt?

A purchase receipt is the buyer's proof of payment, and a receipt from the seller's view is a record that money arrived. GOV.UK says an invoice is not the same as a receipt, which is an acknowledgement of payment, in its guidance on invoicing and taking payment. The same sale produces both: the seller issues the receipt and the buyer files it as a purchase record.

Sellers who need to create receipts can read the Online receipt generator: how to make a valid receipt. This guide is about what the buyer needs the receipt to say. For the bill that comes before a receipt, see What goes on an auto repair invoice? A free template.

What must a purchase receipt show?

A purchase receipt must show enough for a tax authority to see what was bought, when, where and for how much. These are the fields to check before you leave the counter.

1. The seller's name and address.
2. The date of the purchase.
3. A description of what was bought.
4. The amount paid, and the tax included if any.
5. The payment method.
6. A receipt or transaction number.

For example, a receipt that reads only "Total 84.20" with no seller and no description is weak evidence. The IRS says records should show the expense amount, when it occurred, where it was incurred and what it was for, which it calls the essential character of the expense. These details appear in the IRS Publication 463.

US rules: how long to keep a purchase receipt

A US business must keep purchase receipts as long as they are needed to prove income or deductions. The IRS states that you must keep records as long as needed to prove the income or deductions on a tax return, in its recordkeeping guidance for small businesses. It also says you may choose any recordkeeping system that clearly shows your income and expenses.

A paper receipt that fades is a common failure. Consider a till receipt, such as one from a gas station, which is easy to lose or smudge. Photograph or scan it the day you buy, and store the file with the date in its name.

UK rules: receipt or VAT invoice?

A UK VAT-registered buyer needs a VAT invoice, not just a receipt, to reclaim VAT. HMRC's notice states that the VAT invoices you receive are the primary evidence for you to recover VAT you have incurred as input tax, in its VAT records notice. The same notice says that generally you must keep all your business records for VAT purposes for at least 6 years.

So for a VAT-registered business, ask the seller for a VAT invoice when the purchase is more than a till receipt. A receipt shows you paid. A VAT invoice shows the VAT charged.

German rules: what an invoice must show

A German buyer reclaiming input tax relies on an invoice that meets the VAT Act. Section 14 of the German VAT Act lists the details an invoice must carry, including the full name and address of supplier and recipient, the supplier's tax number or VAT ID, the invoice date and a sequential invoice number. It also lists the quantity and type of goods or scope of services, the date of supply, and the tax rate and tax amount.

Ask the seller for an invoice that shows these details, because a bare receipt may not carry them.

Worked example: a filled-in purchase receipt

A filled-in receipt shows the fields in practice. This example is a laptop bought by a US freelancer for business use.

The buyer files the receipt with a note of the business purpose. Sales tax depends on the state and the item, so the figures here are an illustration, not a rate to copy.

What do you do if a receipt is missing or wrong?

A missing receipt is not the end of the claim, but a replacement record helps. Ask the seller for a duplicate, or use the card statement together with a written note of the date, the seller, the amount and the purpose. For a wrong receipt, ask the seller to issue a corrected one rather than editing it yourself.

Invoqk can create receipts for the sales you make yourself, with the fields above filled in.