How Good are Your Business Records?
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Just How Good are Your Business Records
Well, HMRC may well be about to tell you!
HMRC now have a ’Bookkeeping Team’ who have the power to visit businesses to assess how good the books and records are, applying penalties if they don’t ‘pass muster’.
What starts with a simple telephone call from our chums in the HMRC ‘Bookkeeping Team’ could result in a visit and even worse, penalties up to £3000. But before this happens HMRC will give you the opportunity and further time, to bring your books to an adequate standard. HMRC will also specify what improvements need to be made, and will offer you as much help and support as you need to achieve this. Within three months you will receive a further visit and this is where it gets really interesting! If your books & records haven’t improved, a penalty will apply and this is usually £500 for a first offence. This penalty can increase to £3,000 if HMRC find that you have deliberately destroyed records.
During the visit HMRC will also scrutinise your records for inaccuracies in your tax returns which could result in a visit from other teams. This will also apply to VAT, PAYE and the Construction Industry Scheme.
It is not essential but you can have an accountant to attend the visit.
If you do not have an advisor you can use form 64-8 if you want to authorise someone to speak to HMRC about your tax affairs. Even if you have a professional advisor, you're personally responsible for your own tax affairs. You must make sure all the information your advisor supplies to HMRC is accurate.
HMRC claim that they are trying to help us keep good records and after all that should be fundamental to a successful business. Well kept books and records are the cornerstone of good financial management which, in turn, is essential for accurate forecasting. Even in a micro-business, up to date books & records will help you to forecast your tax liability several months prior to your year end. This gives you the opportunity to plan how you are going to pay your tax and better still, to reinvest some of your profit and reduce your liability.
Whilst HMRC are turning the screw even further on small business, it is in an area that will encourage British companies to keep accurate records and in the long term this should help to facilitate good financial management.
This is a very timely wakeup call to all business people - lets put our books & records in order!!
If you would like some help organising and maintaining adequate business records, please contact Sue on tel. 01270 619955