In a move that could raise £600m in fines, HMRC plan to target 50,000 SMEs per year inspecting records going back six years to see if they are ‘adequate’ and ‘accurate’ explains Ben Masters Director of HSJ Accountants.
The previously all too often overlooked penalty for poor record keeping of up to £3,000 per case is to be dusted off in a change of approach by the taxman. Apparently over 40% of SMEs are not keeping adequate records so for HMRC this is another tax collection opportunity.
Tax Inspectors are expected to ask to see a number of source records in addition to full accounts such as till rolls, cheque stubs, paying in slips, records of sales and takings, including cash receipts as well as all bank and credit card statements.
This record keeping penalty will be in addition to any tax enquiry penalties, so our advice is to ensure your record keeping is suitable for your business and avoid a potential penalty.
I’m not sure what records I need to keep?
You can of course ask your accountant, otherwise:
- Why not have a look at this simple video on record keeping
- Or try this online business record keeping survey that shows what business records you should be keeping with a handy PDF report of recommendations.
So what steps can you take to improve your record keeping?
You’ll find all of HMRC’s record keeping advice online. Don’t forget that you need to keep all of your records for at least 6 years and you must keep then in a format that is easily readable and accessible.
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