HM Revenue & Customs face accusations of having double standards after they announced plans to spot check the record keeping of 20,000 small businesses, although they have been accused of negotiating deals to reduce the tax paid by large corporations. April 2012 sees HMRC launch spot checks to discover whether small businesses are keeping adequate records, with the power to issue fines if necessary.
Business groups and some Conservative backbenchers are against the idea of record keeping spot checks, especially as small businesses are already facing a tough year. Ministers have promised to reduce the burden of red tape, and yet they intend to forge ahead with the checks by HMRC. The national chairman of the Federation of Small Businesses, John Walker said:
“We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers concerned it is a policy aim to make this happen. There is a huge difference between the rhetoric of the Government about helping small businesses and what it is doing in reality.”
Among the small businesses facing spot checks are manufacturers, builders, restaurants and IT companies, who will be expected to provide receipts for expenditure and income for the last few years to support their tax return. Fines of up to £3000 may be charged to businesses that do not have the necessary documentation.
As a result of concern from professional bodies, HMRC will carry out a review of the project with professionals, although they will still carry out a smaller number of record checks.
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