Drive to examine company records would affect 50,000 SMEs and could be introduced this year
Fears of a fresh attack on small business have emerged over the imminent deadline for a HM Revenue & Customs inquiry on business records checks that could see small businesses investigated and fines issued for bad record keeping. The proposals indicate HMRC wants to target small businesses keeping inaccurate trading records dating back over the past six years, with penalties of up to �3,000.
Nothing has been agreed yet, but the proposals would affect 50,000 businesses a year and could start later this year ? with the aim of bringing in up to �600m in fines for the government.
Initial plans see HMRC examining company records ? including cheque stubs, till rolls, sales and takings records and bank and credit card statements among other things ? with penalties imposed for records that are deemed not to be "accurate" or "adequate". The clampdown may see SMEs being exposed to formal tax enquiries too.
Ronnie Ludwig, partner at accountancy firm Saffery Champness, says: "HMRC's plans to investigate the financial records of SMEs is an ominous sign at a time when entrepreneurs are already under great pressure in a fragile economy. This is an interesting shift of focus for the taxman as, historically, fines for poor record keeping have been very rare.
"Companies however should take note and ensure that financial records are accurate and up to date, seeking expert advice if necessary. This will ensure that you avoid penalties and fines, and will also help you to keep a better gauge of your company's financial well-being as you navigate through turbulent economic times."
Saffery Champness will be submitting evidence to the inquiry looking into business records checks. Essentially, it will amount to HMRC demanding small businesses keep their records in order on an ongoing basis rather than once a year. It will target 50,000 businesses and could start later this year.
Andrew Cave, head of policy and public affairs at the Federation of Small Businesses, said his organisation will also be submitting evidence to the inquiry looking into business records checks. "Essentially, it will amount to HMRC demanding small businesses keep their records in order on an ongoing basis rather than once a year," he adds.
"Obviously we are very concerned by this as it amounts to little more than a short term revenue grab and will be extremely unsettling and onerous for our members."
The deadline for the consultation is 28 February 2011.
Source: http://www.guardian.co.uk/money/blog/2011/feb/16/hmrc-small-businesses-record-keeping
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