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Monthly Archives: July 2011

HMRC announce new powers to check business records – be prepared

With Her Majesty’s Revenue & Customs (HMRC) recently launched campaign to encourage small businesses to keep proper business records, Lutterworth accountancy practice Howell & Co is urging  all local businesses with less than £500,000 turnover or less than 10 employees to take heed and counter what could be an intrusive, if not devastating ‘spot check’.

With ‘spot checks’ by officials from HMRC flagged as beginning this month, having been trialled in selected areas previously, Rob Howell, director Howell & Co recommends small business owners use the opportunity to ‘clean up their act’ and if in doubt speak to their accountant in order to ensure this essential but sometimes neglected element of running a small business is up to date and up to speed.

Rob commented: “Although we appreciate that it’s helpful for HMRC to launch a campaign to improve small business’ record keeping, the proposed ‘spot checks’ can be daunting, especially as HMRC  can levy fines of up to £3,000 where they find that proper records have not been kept.”

He added, “Given the current economic client, it is also likely that HMRC will use the campaign to investigate an organisation’s records to identify any underpayment of tax and if there has been poor record keeping then it will be very difficult for the taxpayer to contest any assessments made by HMRC.”

Reiterating that small business owners need to keep records which provide evidence to support their tax returns, specifically proof of income and expenditure, Rob highlighted that the type of records required will depend upon what is appropriate for the size and nature of the business. This will vary widely from business to business but should almost certainly include:

  • A cash book of payments and receipts
  • A petty cash book
  • Sales invoice day book/copy invoices
  • Purchase invoice day book/supplier invoices
  • Wages records
  • Till receipts/electronic records of sales
  • Records of cash receipts
  • Bank statements, cheque book stubs, paying in books
  • Bank reconciliation
  • Stock records
  • Hire purchase/lease details
  • Details of personal drawings/cash introduced

“If a business manager is in any doubt or needs clarification they should seek the advice of a qualified accountant, who will recommend what would be considered appropriate systems for the size of the business. It could prove a wise investment in the long run,” Concluded Rob.

Howell & Co has been assisting Online Profiling Ltd since 2005. They couple efficient service with good practical advice and are always extremely helpful and professional.  
Trevor DawesManaging DirectorOnline Profiling Ltd

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