HMRC to clamp down on poor record keeping
The government has announced that small businesses and other enterprises demonstrating poor bookkeeping are to be punished, it has been reported.
With all the activity surrounding the Self-Assessment Tax Returns deadline, taxpayers have every incentive to ensure that their records are in order and up to date.
However, in a bid to see small businesses and other taxpayers improve their bookkeeping, HM Revenue & Customs (HMRC) is preparing to fine those found demonstrating poor practice in this area, as reported by Accountancy Age.
According to the news provider, HMRC is looking to reduce the amount of unpaid tax by targeting small firms that make mistakes based on information from poor records.
"The businesses will benefit from improved financial management which in turn will boost their chances of survival. Those seen to be fulfilling their obligations will likely have a lower chance of a subsequent compliance intervention from the taxman."
News of the crackdown, which could see firms fined up to £3,000, was met with concern from a number of industry experts, with the Forum of Private Business (FPB) saying the move comes despite HMRC promising a "lighter touch" approach to bookkeeping mistakes in light of the recent VAT rise, which saw the rate increase from 17.5 per cent to 20 per cent.
HMRC's website explains that the department promotes a high level of record keeping in order to minimise the risk of tax overpayment, saying that if sufficient evidence of income and outgoings cannot be shown, mistakes are more likely to occur.
"If you do not maintain good records, you might not be able to render your VAT return on time and this can result in a surcharge," the department warned.
"Wherever possible, we will give you the benefit of the doubt, but don't forget there are penalties for failing to keep proper records to back up a tax return or claim. The law says that everyone who pays tax must keep the records they need to fill in a tax return. If you don't keep records, how can you show what you've earned and what you've spent?"
HMRC added that VAT-registered businesses are "legally required" to keep certain types of business record and reminded taxpayers that if they are charged any penalties, they can appeal against the decision to independent tribunals.
Posted by Jacob Williams
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