SMEs told: improve record keeping or face second visit

THE TAXMAN is telling businesses that are part of a mandatory pilot scheme that they may receive another visit if their record keeping does not improve, Accountancy Age has learnt.

The pilot scheme was announced in April this year following a consultation that ended in March. Although HM Revenue & Customs has not yet responded to the consultation, the businesses that were chosen to be part of the pilot scheme are being informed how they need to improve their record keeping.

According to letters sent from the Liverpool tax office, none of the businesses were deemed to have had adequate records. The businesses were told that inspectors “may visit you again in the next three months to check whether you have made improvements in the areas mentioned”.

They all recommend that sales invoices should be issued with consecutive numbers and a cash book be maintained. Other recommendations included a drawings record always being kept, a mileage log being maintained and business records being written up at least weekly.

The letters have been seen by Abbey Tax Protection and are all addressed to Liverpool businesses.

A spokesman for Abbey Tax said that help in educating SMEs about maintaining records is welcomed.

However, he added: “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.”

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