HMRC to investigate poor record keeping.

Date: 13 January 2011

HMRC is planning a programme of Business Records Checks that will review both the adequacy and accuracy of business records within the ‘small and medium enterprise’ (SME) sector.

HMRC has recently announced it is launching a consultation with a view to investigating small and medium enterprises (SMEs) for the adequacy and accuracy of their records.

Companies that fail to provide evidence of proper record keeping could face fines of £3,000. Here’s what HMRC has to say:

“The loss of tax through poor record keeping, particularly in the current economic climate, cannot continue and HMRC is, therefore, determined to use the powers at its disposal to improve business record keeping and so reduce the loss to the Exchequer that stems from poor business records.”

The initiative, called the “Business Records Checks” campaign, will be implemented in the second half of 2011.

Under the scheme, which is under consultation until the 23 February 2011, HMRC is set to investigate up to 50,000 SMEs each year claiming that over 40% of the sector (two million businesses) faces examination.

So what questions should you consider?

1. Does all your bookkeeping (including manual spread sheets) agree to signed accounts?
2. Does all VAT/PAYE/Corporation Tax reconcile from bookkeeping to signed accounts?
3. Do you have all your bookkeeping in one place?
4. Are your opening balances carried forward correctly into the new financial year?
5. Is there a clear audit trail between bookkeeping and accounts?

If you can answer 'yes' to all the above then you are fine. If not you need to think about getting the books in order sooner rather than later.

If you are with My Accountant Friend, then you can be assured that all the regulations are met. Our online accounting and bookkeeping system provides all of the necessary information in one place, accessible at the touch of a button.