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13 Jun 2011
THE TAXMAN has been accused of heavy handing SMEs during a pilot scheme to clamp down on poor financial record keeping.
In March, HMRC started a pilot scheme investigating the books of trading businesses. It claimed its Business Records Checks final scheme would tackle 50,000 of the worst offenders issuing fines of up to £3,000, The Daily Telegraph reports.
Further reading
The taxman said it would not issue any fines during the pilot period.
However, according to Baker Tilly, accountants had heard of HMRC officers informing small business owners that they would be fined if "anything was found to be wrong".
"If HMRC is genuinely looking to improve the standard of record keeping, rather than investigating traders by the back door, then the department must make sure it plays by the rules," Mike Down, head of tax risk and investigation at Baker Tilly said.
A spokesman for HMRC said: "We are not seeking to apply the penalty provision during [the pilot] other than in exceptionally serious cases. In [most cases] the approach will be to assist in improving the business records, where there is a need."
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Visitor comments Add your comment
The not so big and bad taxman
A lot has been said lately about the big bad taxman coming to pounce on small businesses and take their money. While imposing penalties unjustifiably is unfair, HMRC must act where there is a necessary and serious need to improve record keeping. At the end of the day, poor record keeping is one of the top five reasons why businesses fail so there can only be good, and not harm, in getting your books in shape. Not only will this keep small businesses compliant, but more importantly, it will help them run their business better. As well as cracking down on tax evaders, the possibility of a compliance check could prove the extra encouragement needed for those not currently keeping good records to start doing so. This will ensure that their businesses stand the greatest chance of succeeding in the future.
Posted by: Diana Flier, Compliance Analyst, Intuit UK, 16 Jun 2011 | 16:37