New guidelines setout by HM Revenue and Customs (HMRC) will ensure that more small business owner have fewer excuses for erroneous book-keeping.
The HMRC have put plans in place to carryout spot-checks at random across 50,000 small businesses in an attempt to clamp down on poor book-keeping and to ensure they keep their financial records in order.
This comes as a stark warning to many small firms around the UK as they could be facing fines of up to £3,000 if any irregularities are discovered and the records fail to meet the minimum standards.
The National Tax Director for Smith & Williamson, Richard Mannion, commented:
“Currently, the tax authorities typically scrutinise an organisation’s tax affairs and record keeping if they believe it has filed an inaccurate tax return and is therefore paying too little tax.”
Mr Mannion went on to add that the new programme means that tax inspectors will be able to focus on current year records “before a tax return is even submitted.”
See below for our top tips on organising your book-keeping:
- Ensure you keep invoices, bank statements, details of expenses and of any purchases, etc.
- It’s strongly advisable to keep records going back for a minimum of 6 years (if your company has been running that long.
- Make sure you stay on top of your record keeping and expenses – this will help to make things easier and make your book-keeping more accurate.
- Try to avoid making estimations of amounts – if you have to then ensure you can substantiate it with some suitable evidence.
- Try to find a suitable piece of software or book-keeping system to help keep track of invoices, bank statements, etc. This will help ensure you stay up-to-date and on top of any financial issues.
For more help and information, the HMRC have a number of tax tools that could help small business owners to ensure they are filing their tax returns correctly, including:
- This is a great, basic guide on keeping records for business: www.hmrc.gov.uk/factsheet/record-keeping.pdf
- This is a general guide on keeping records for your tax returns. Giving more detailed guidance on what records you may have to keep and common problems that may occur: www.hmrc.gov.uk/sa/rk-bk1.pdf
- How to establish a simple record-keeping system – www.businesslink.gov.uk/recordkeeping
- This tool looks at the records you may have to keep and will assess how well you keep them: www.businesslink.gov.uk/recordkeepingcheck