Are your business records kept properly?

HM Revenue & Customs (HMRC) plans to investigate small and medium businesses (SMEs) who fail to keep trading records properly. This could bring in £600m in fines. Given the new compulsory requirement for businesses to file their accounts online, HMRC seems to be reallocating its processing resources into revenue raising.

HMRC is planning to visit 50,000 businesses per year and will be inspecting records going back six years to see if they are ‘adequate’ and ‘accurate’. The penalty for poor record keeping can be up to £3,000. This could raise £600m over the next four years.

Each visit could take up to half a day and inspectors will be asking to see a number of records in addition to a full set of accounts, such as till rolls, cheque stubs, paying-in slips, a record of all sales and takings, including cash receipts, and bank and credit card statements.

If records are ‘adequate’ and ‘accurate’ some businesses may face formal tax enquiries in addition to fines. So be warned.