UK Business Advisors (UKBA) understands that HMRC have carried out a random enquiry programme from which they believe that 40% of SMEs have either inadequate or poor record keeping. They issued a consultancy document in December entitled “Business records checks” with a view to implementing a programme from the middle of this year to examine the books and records of some 200,000 small businesses. They anticipate raising an additional £600m in tax over four years – an average of £3,000 per company.
UKBA’s own research has found many commons problems such as:
· Poor evidence of expenditure such as missing key purchase invoices
· No documented dividend resolutions
· No minutes of key board decisions
· No records in support of journal entries like bad debts or disposal of major assets
· No directors service contracts in multiple-director companies
· Outsourced services not contractually written down or documented.
Any of these give HMRC an easy route into a company’s records and open up investigations.
Richard Terhorst, Specialist in the Financial Support arm of the UK Business Advisors said “HMRC have found a new hunting ground – taxpayers whose records are poor. We strongly recommend that businesses with concerns about their records get in touch with us. We’ll give you a health check. It could save you a lot of grief and cost in the future.”
For full details visit the UKBA website www.ukba.co.uk/mgba or contact Richard Terhorst at UKBA on 0333 444 8522.