HMRC to follow up on small business record keeping

Contractor accountants could find themselves in demand after it was revealed that HMRC agents will conduct follow up checks on small businesses that do not keep accurate book keeping records. The follow up visits will be made to see if firms taking part in the pilot scheme have improved their systems.

A spokesperson for Abbey Tax Protection said that small businesses should welcome any move that helps them improve their record keeping. However, judging from past experiences, the Revenue doesn’t take the big picture into consideration when launching these initiatives. It needs to consider whether its recommendations are both fair and suitable for small business owners to comply with.

He went on to say that he suspects suggestions will be cut and pasted from a one size fits all scenario rather than specifically tailored to suit individual firms.

Earlier this year, the Chartered Institute of Taxation expressed similar concerns, saying HMRC is taking the wrong approach. Anthony Thomas, the now president of the CIoT, said the project seemed to be more about imposing penalties than helping firms improve their systems.

Meanwhile, increased new penalties could see firms facing fines of up to £1,300 if they miss vital deadlines. Around 10% of companies have missed tax return deadlines or VAT payments, according to the Clydesdale and Yorkshire Banks.

In a lot cases it appears that small business owners struggle to understand red tape and in extreme cases this could lead to the demise of their enterprise.

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