Letters from HM Revenue & Customs have been sent out to businesses as early as March 2011, to inform a number of Small and Medium Enterprises that they have been selected for a business inspection. This is much earlier than expected, as businesses and accountants believed that checks would not start until the second half of 2011.
A small business could receive a penalty of a maximum £3000 if company records are not in order. Over the next four years, HMRC intend to inspect the business records of 50,000 each year. The early notifications received by some businesses are in fact part of a pilot scheme, which HMRC failed to make clear at the time. As this is the case, penalties will not be charged unless HMRC comes across an exceptional case, such as deliberately destroying records. The Chartered Institute of Taxation has approached HMRC, and asked them to make it clear that these early requests are part of a trial. HMRC has given reassurance that this is the case, but the deputy president of CIOT, Anthony Thomas said:
“However they should have made this clear to tax advisers, business organisations and, above all, those taxpayers they are targeting, from the outset.”
HMRC has confirmed that it is looking at ways to make the system work with the minimum penalties being issued. Online accounting is a simple way to keep your business records up to date and in order, as the accounts are prepared using real time information. A small business accountancy will also deal with HMRC on your behalf.
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An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.