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Friday, 31 December 2010

HMRC to fine small businesses for poor record keeping

In a festive announcement, HMRC said that in 2011 they would be clamping down on small businesses that did not keep proper records and would issue fines for non compliance.

The “Business Records Checks” campaign will target all 4.9m small and medium sized businesses. Exactly what amounts to non compliance is not completely clear but the HMRC has given guidelines to its inspectors such as;
"analysis books not completed regularly – a system whereby the books are written up more than four weeks after the event is not as reliable as books completed contemporaneously."

For many small businesses the MD is the lead salesman, debt collector, accountant as well as payroll administrator. Having the HMRC tell you to have an immaculate record keeping system is just added stress when many business people are struggling.

The rise in VAT in January will be another headache for small businesses.

We agree with HMRC assertion that good record keeping will help businesses manage cash and make them less likely to fail. However, we fear that HMRC inspectors ideas of what amounts to non compliance may not be reasonable in the real world of business. Keeping an eye on cashflow is most important and we have tools on our site that you can use on our cashflow and cost cutting page. If you find your business is having difficulty paying VAT or Paye we can help.

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