HMRC Concerned at Quality of Small Business Accounts

HMRC is concerned that many small businesses do not keep adequate records to support the entries on their tax returns, so they have launched a campaign to encourage better record keeping. However, more serious interventions are expected over the next year.

We know from a consultation paper released in December 2010 that HMRC is planning to write to around 50 000 small businesses advising that they may be subject to a detailed records check. If a business is visited and it’s records are found to be inadequate, then that business may be liable to a penalty of £3 000. This penalty cannot be suspended even if the taxpayer promises to keep better records in future.

Now is a good time to ensure that records are kept up to date and can support tax returns.