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HMRC record checks defy red tape reduction plans Jan 2012


The Forum of Private Business (FPB) has accused HMRC of defying the Government's own attempts to reduce red tape by ramping up its business record checks. It claims that the checks, which will affect 20,000 small and medium-sized businesses in 2012/13, are adding to the red-tape that is already throttling businesses.

Following a pilot in eight areas of the country earlier this year, HMRC has said that it plans to check 12,000 SMEs by April 2012, and 20,000 in the financial year 2012/13.
The checks are designed to assess the adequacy of business records. Those with what HMRC calls ‘serious inadequacies' could face fines of up to £3,000.

The Forum's chief executive Phil Orford said: "Small businesses want to keep proper records but struggle with the significant administrative barriers that exist in the UK. They also want to pay their tax bills on time but the reality is that many firms are struggling with cash flow in extremely tough economic conditions - yet HMRC is being completely inflexible. "

We asked Tonmoy Kumar, Manager of the Accounts Department of ABDS what records you need to keep. He says:

“Legally, you have to keep financial records going back six years.
 
The basic financial information that you should keep a detailed record of includes:
 cash sales book
 cash purchases book
 cash book summary
 bank statements
 sales ledger
 purchase ledger
As an employer, you must also keep a record of wages paid for six years, plus Pay As You Earn (PAYE) records for three years in addition to the current financial year.
If you're a contractor in the Construction Industry Scheme (CIS), you need to keep your CIS records for three years in addition to the current financial year.”

Stuart Coleman of ABDS added
“As well as avoiding fines, there are clear benefits to all businesses of better record keeping. Businesses are more likely to succeed if they keep good accounting records as they're able to see instantly how profitable they are; if they've got enough money coming in, if people are paying them, and if they're able to plan ahead.”

If you need any help and advice on Books and Records and Financial Planning and Reporting, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar now to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

 

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