HMRC have announced that they are planning a programme of checks that will review the adequacy and accuracy of records kept by small and medium-sized enterprises. It is planned that this campaign will begin over the summer of 2011 with around 200,000 small businesses being selected for checks.
According to HMRC poor record keeping is a problem for 40% of small businesses and it is hoped that this campaign will see a major improvement in the standard of business record keeping.
Currently the law states that anyone who completes an income tax or corporation tax self assessment return must keep and preserve the records needed to make and complete such a return correctly. For those who carry on a trade or business there is a further requirement that all invoices, bank statements, paying in books, and details of purchases and expense details etc also be kept.
You must normally retain your company or organisation’s business and accounting records for at least six years. You don’t need to keep the vast majority of your records in their original form. If you prefer, you can keep a copy of most of them in an alternative format. However there are certain records that you must keep in their original form (e.g. dividend vouchers).
If your business does not keep adequate records for tax purposes, or does not retain records for long enough, then you may be charged a penalty and in the most serious of cases this can be up to £3,000.
If you would like more information or if you have any further questions please do not hesitate to give us a call on 01733 371180.