HMRC to tackle small businesses with inaccurate trading records

News Article - 21 February 2011
Category: Business

HMRC has announced plans to tackle small businesses that consistently keep inaccurate trading records.

The initiative is designed to investigate and discipline as many as 50,000 small and medium enterprises (SMEs) which could recoup £600m in penalty fines for the Government. The penalty for businesses with accounts deemed to be inaccurate or inadequate is a £3,000 fine, with many SMEs also facing formal tax investigations.

Ronnie Ludwig, partner in the private wealth group at accountancy firm Saffery Champness, said: "HMRC's plan to investigate the financial records of SMEs is an ominous sign at a time when entrepreneurs are already under great pressure in a fragile economy."

Historically fines for poor book-keeping have been very rare but the change in shift from the tax man will force businesses to revamp accounting methods. Accurate book keeping can help businesses gauge the true financial well-being of their company.

The importance of keeping books up-to-date has never been more crucial to businesses, particularly in the current economic climate. A £3,000 fine is a penalty most SMEs can do without.

Many business owners find the administrative work involved in running a business extremely time-intensive. HMRC estimates that 40 per cent of all SMEs suffer from poor book keeping and the organisation is aiming to clamp down on the root cause of unpaid taxes - slapdash book keeping.

HMRC received a record 572,455 online tax returns on the January 31^st deadline, highlighting the fact that many businesses may see book keeping as an afterthought.

If HMRC chooses to enforce more stringent checks on book keeping SMEs will be forced to move with the times and consider implementing a comprehensive accounting system. Accounting and business management software can increase the efficiency of an entire business operation with highly functional modules that allow businesses to control and automate accounting tasks simply and effectively.

Access business accounting software offers an intuitive financial solution to simplify the entire financials process. The cash book management module enables flexible day-to-day cash management, which updates the nominal ledger instantly.

Businesses have access to a full history of receipts and expenses with dynamic real-time updates.

For more information, please call Access on0845 345 3300.

Article keywords: HMRC, small business, medium business, SME, tax investigations, Ronnie Ludwig, Saffery Champness, book-keeping irregularities, financial penalties, accounting system, accounting and business management software, cash book management module, nominal ledger, real-time updates

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