HMRC Compliance checks

HMRC Compliance checks


HM Revenue and Customs (HMRC) are on the lookout in 2011 for small business tax under payments and tax evasion with the HMRC’s introduction of making tax compliance spot checks on small United Kingdom businesses.

These compliance spot checks are one of the last things that small UK businesses need as they try to battle the poor economic climate that exists today. What is expected is that roughly 50,000 small UK businesses will be visited, closely examined and if their books do not meet the minimum standards set then they could end up facing a fine of up to £3,000 which for many small businesses could be devastating.

The reason for the compliance spot checks is because HMRC believes that there could be around 2 million UK small businesses with inadequate records and this is when under payment of tax can occur. The obvious reason for this move by the HMRC is to raise revenue, however it should also be pointed out that poor book keeping is a big factor for a business to fail and so encouraging businesses to get their finances and taxes in order is fundamentally a positive thing.

HMRC states that you should keep a record of every single business transaction you make and so to help small businesses out we have compiled a few tips that will help you keep order to your financial transactions.

Of course what records you need to keep will vary depending on how many staff you employ, whether you are VAT registered or whether your company is Limited, however we have outlined a small checklist of what records you should be keeping below:

  • Cash book detailing monies in and money out of the business bank account
  • Record of sales made, including tracking of debtors
  • Record of wages paid, including tax and NIC
  • Invoices and receipts are needed for both issued invoices and received invoices
  • Hire purchase and leasing detail records
  • Inventory of stock left over at the end of the financial year
  • Bank statements, building society statements, pass books, cheque stubs and also paying in slips that include specifics of any business dealings
  • Details of any funds that is taken out of the business for personal use
  • Details of private money brought into the business or taken out of the business

Finances of your business need to be managed on a regular basis, preferably weekly, so do not make the mistake of leaving it for another day. You need to be on top of your finances to be successful in business and with the new spot checks now being enforced it is more important than ever for small businesses to have their financial situation in check.

PAH Accounting are offering small businesses a free, no obligation compliance check. For more information, contact us and ask for Phil.