50,000 SMEs’ book-keeping targeted by HMRC

50,000 SMEs' book-keeping targeted by HMRC

The taxman believes 40% of the 4.9m SME community keeps poor records and in turn may have unpaid tax liabilities. It intends to investigate up to 50,000 and heaviliy fine the worst offenders

AS MANY AS 50,000 small businesses could be fined by the taxman for failing to keep proper tax records.

Under a HM Revenue & Customs consultation, the taxman wants to delve into 50,000 of the two million SMEs it believes have poor record-keeping that has led to unpaid tax.

The Business Records Checks consultation could see fines of up to £3,000 for those HMRC finds have unpaid tax liabilities through poor book-keeping.

HMRC’s aim is to improve book-keeping in 40% of the 4.9m SME community where records have been found wanting.

The 2008 Finance Act gave HMRC the power to investigate up to 50,000 business records, beginning in the second half of 2011.

In the consultation, HMRC is exploring how to implement the penalty regime, including the timeframe in which to allow record-keeping to be brought up to standard.

Forcing these SMEs to keep better records will benefit tax advisers, HMRC suggests in the paper, as poor book-keeping adds to advisers’ admin burden.

The businesses will benefit from improved financial management which in turn will boost their chances of survival. Those seen to be fulfilling their obligations will likely have a lower chance of a subsequent compliance intervention from the taxman.

The consultation ends on 28 February.

 

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

9m

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

1y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

8m

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

8m

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource