Taxman warns SMEs of second visit if record keeping does not improve

News Article - 16 June 2011
Category: Business

The taxman has warned small and medium-sized enterprises (SMEs) that they may receive a second visit as part of a mandatory pilot scheme if record keeping does not improve.

The scheme, launched in April following significant consultation within HM Revenue & Customs, is aimed at informing SMEs where they can improve their record keeping and financials processes.

Letters have been sent to businesses from the Liverpool tax office to a host of businesses deemed to have inadequate records.

These businesses were informed that inspectors "may visit you again in the next three months to check whether you have made improvements in the areas mentioned".

Many of the recommendations to SMEs include improvements to sales invoices, cash books, mileage logs and more on a weekly basis.

A spokesman for Abbey Tax has welcomed the taxman's move to educate SMEs further, but warns businesses may have to improve using a one-size-fits-all solution.

"Experience tells us that HMRC has an unhealthy desire to be prescriptive in these initiatives, without taking into consideration the big picture and whether the recommendations are fair and suitable for the SME to comply with.

"We suspect the [initiative] will not result in bespoke suggestions based on the size and nature of the business, but rather the suggested improvements will be cut and pasted from an internal one size fits all guidance," he said.

Back in March tax body, the Chartered Institute of Taxation (CIOT), slammed the new proposals from HMRC to place business record keeping under greater scrutiny. The CIOT argues the taxman's current plans of improving record keeping will fail, suggesting the concept will merely "raise money through penalties [rather] than helping businesses improve their systems".

"HMRC are putting forward a blunt instrument designed to deliver punishment when what is needed is a collaborative process focused on providing, education, guidance and support," added Anthony Thomas, deputy president of the CIOT.

Automated business accounting software is becoming a popular tool for SMEs looking for an efficient financial reporting solution.

The software enables businesses to adopt powerful reporting methods and drill-down, alongside comprehensive audit trails that give start-ups and growing organisations instant access to the information needed to make informed strategic decisions.

Article keywords: SME, medium-sized enterprise, business accounting software, HM Revenue & Customs, HMRC, Chartered Institute of Taxation, CIOT, Anthony Thomas

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