Accounting industry 'helping to sustain prosperity'

News Article - 24 May 2012
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Many small businesses have received letters announcing book-keeping spot checks despite the taxman not yet finalising the overall consultation period.

HM Revenue & Customs (HMRC) has been accused of "jumping the gun" for notifying these businesses. HMRC confirmed this week that initial spot-checks would be pilots and no fines would be levied, except in extreme circumstances, despite initial letters to SMEs not making this clear.

The taxman has proposed large-scale record checks with up to 50,000 small and medium-sized businesses to be checked annually under the new plans.

Anthony Thomas, Chartered Institute of Taxation deputy president, said: "HMRC's reassurance that this is a 'test and learn' pilot where no penalties will be levelled, other than in exceptional circumstances, is welcome.

"However they should have made this clear to tax advisers, business organisations and, above all, those taxpayers - represented and unrepresented - they are targeting, from the outset. By not doing this HMRC gave the strong impression that they were proceeding with this project prematurely and without listening to consultees."

The taxman insists it has not sent out spot-check announcements early. An HMRC spokesman said: "We do not accept that they were sent prematurely. We want to see how far we can take this forward without fines and to be as supportive as possible for businesses."

Last month the Chartered Institute of Taxation slammed HMRC plans to escalate small business book-keeping checks, arguing that drastic improvements were required if these spot checks are to help businesses improve their systems.

With SME spot-checking on the increase, organisations are encouraged to ensure their book-keeping is transparent and that they have instant access to the information required.

Many small business start-ups now look to implement business accounting software to improve the efficiency of their financials and accounting processes such as budgeting, reporting and asset management.

Article keywords: HM Revenue & Customs, HMRC, small business, medium-sized business, Anthony Thomas, Chartered Institute of Taxation, book-keeping checks, business accounting software

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