50,000 SMEs' book-keeping targeted by HMRC

News Article - 13 January 2011
Category: Regulatory

Up to 50,000 small businesses could face fines for failing to keep accurate tax records. Under a HM Revenue and Customs (HMRC) consultation, the taxman wants to scrutinise a proportion of the two million SMEs accused of sitting on unpaid tax bills due to poor record-keeping.

Any SMEs that are found guilty of unpaid tax liabilities as a direct result of poor book-keeping could face fines of up to £3,000. HMRC's goal is to improve book-keeping in 40 per cent of the 4.9m small businesses where records have been judged as sub-par.

The 2008 Finance Act gave HMRC the power to investigate up to 50,000 business records, to begin in the second half of 2011. Under the current consultation, HMRC is considering how best to go about scrutinising SME book-keeping. Issues currently being debated include the length of time in which organisations will be allowed to bring tax records up to standard.

In addition to reducing the number of unpaid tax bills, HMRC suggests that businesses with compliant book-keeping benefit from improved financial management leading to a better chance of survival. The administrative burden will also be reduced as compliant companies will be less likely to face future intervention from the taxman.

The consultation ends on 28 February, after which HMRC will decide on a course of action.

The importance of accurate and compliant book-keeping amongst small and medium sized businesses cannot be overstated; if found to have kept poor records the significant reputational and financial penalties may damage SMEs' ability to operate effectively in 2011, leading to loss of revenue. With a tough 2011 predicted due to the VAT increase and the impact of the Government's Comprehensive Spending Review, firms must avoid losing money due to poor tax records.

Access' business auditing functionality streamlines business book-keeping and allows full financial transparency to be maintained at all times. Key features, such as ICAEW-approved audit trails and VAT reports, help to make all parts of the auditing process streamlined and compliant.

For more information please call Access on 0845 345 3300.

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