Small businesses which fail to keep proper financial records could incur the wrath of HM Revenue & Customs (HMRC) in the New Year, it has been revealed. HMRC is planning a clampdown on inaccurate bookkeeping and tax underpayment in 2011 through a Business Records Checks campaign, it has been reported.
According to the agency, 40 per cent of small businesses suffer from poor bookkeeping and these are the enterprises most likely to be targeted by investigators. Existing legislative powers will be used to check out 50,000 small businesses, with fines of up to £3,000 likely for those with the most disorganised financial records.
One Accountant has warned that many small business owners find it a "nightmare" trying to keep up with accounts administration. A spokesman said: "One of the difficulties facing entrepreneurs and small businesses is that they may have to keep records for income tax, VAT, capital gains tax, PAYE and so on. Separate penalties apply for each set of taxes so a small business can fall foul of the rules in several areas. Tax inspectors have little understanding of what life is like in the business world, and therefore expect entrepreneurs to keep records in textbook order.
Companies House recently urged businesses with a tax year end date of March 31st to file their business accounts before the December 31st deadline.
APA supports the need for better bookkeeping but will be writing to the Business Secretary asking him to start with a process of better education for business managers (reminding HMRC that few small business can afford the luxury of an in-house finance manager), followed by simplified processes and greater assistance. Gareth Osborne said: “Raping and pillaging small business is massively counterproductive at a time when the economy is dependant on them to employ more staff; especially redundant public sector staff - with financial know-how. We will be lobbying hard for Government to find ways to improve the reporting and payment mechanisms before they start fining every business in sight.”
APA
According to the agency, 40 per cent of small businesses suffer from poor bookkeeping and these are the enterprises most likely to be targeted by investigators. Existing legislative powers will be used to check out 50,000 small businesses, with fines of up to £3,000 likely for those with the most disorganised financial records.
One Accountant has warned that many small business owners find it a "nightmare" trying to keep up with accounts administration. A spokesman said: "One of the difficulties facing entrepreneurs and small businesses is that they may have to keep records for income tax, VAT, capital gains tax, PAYE and so on. Separate penalties apply for each set of taxes so a small business can fall foul of the rules in several areas. Tax inspectors have little understanding of what life is like in the business world, and therefore expect entrepreneurs to keep records in textbook order.
Companies House recently urged businesses with a tax year end date of March 31st to file their business accounts before the December 31st deadline.
APA supports the need for better bookkeeping but will be writing to the Business Secretary asking him to start with a process of better education for business managers (reminding HMRC that few small business can afford the luxury of an in-house finance manager), followed by simplified processes and greater assistance. Gareth Osborne said: “Raping and pillaging small business is massively counterproductive at a time when the economy is dependant on them to employ more staff; especially redundant public sector staff - with financial know-how. We will be lobbying hard for Government to find ways to improve the reporting and payment mechanisms before they start fining every business in sight.”
APA
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