|50,000 SMEs' Book-keeping Targeted by HMRC|
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As many as 50,000 small businesses could be fined by the taxman for failing to keep proper tax records.
Under a HM Revenue & Customs consultation, the taxman wants to delve into 50,000 of the two million SMEs it believes have poor record-keeping that has led to unpaid tax.
The Business Records Checks consultation could see fines of up to £3,000 for those HMRC finds have unpaid tax liabilities through poor book-keeping.
HMRC's aim is to improve book-keeping in 40% of the 4.9m SME community where records have been found wanting.
The 2008 Finance Act gave HMRC the power to investigate up to 50,000 business records, beginning in the second half of 2011.
In the consultation, HMRC is exploring how to implement the penalty regime, including the timeframe in which to allow record-keeping to be brought up to standard.
Forcing these SMEs to keep better records will benefit tax advisers, HMRC suggests in the paper, as poor book-keeping adds to advisers' admin burden.
The businesses will benefit from improved financial management which in turn will boost their chances of survival. Those seen to be fulfilling their obligations will likely have a lower chance of a subsequent compliance intervention from the taxman.
The consultation ends on 28 February.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Dec29, 2010