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Business Record Checks

posted 17 Nov 2011, 07:02 by Hayter-Dalgliesh Bookkeeping Services

HMRC believes that a lot of businesses do not pay the right amount of tax because they don't accurately record their business income and expenditure. In other words their business records are not of a high enough standard to produce accurate accounts. Many businesses do not keep perfect records but accountants and bookkeepers such as myself work with business owners to help them retain the necessary documents, and use those records alongside a good understanding of the business, to produce a reasonable statement of profit or loss for the tax return.

Unfortunately HMRC are not taking such a helpful approach. They are now sending out 120 tax officers to examine the unsorted raw records held at thousands of businesses. If the tax officer (who is not a trained accountant), judges the business records to be inadequate the business owner could receive a penalty of up to £3,000.

Some businesses have been visited already as part of a training exercise for the tax officers. Following those 'test and learn' visits the tax officer may have made recommendations, but he won't have raised a penalty, unless there were absolutely no business records to examine.

Now the learning stage is over and the gloves are off. We expect penalties to be imposed on many businesses by these lightly-trained tax officers. If a tax officer has asked to examine your business records, please contact us immediately. Potential penalties can be avoided if we are able to explain to the tax officer exactly how your basic business records are turned into an accurate profit/loss statement.

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