Shropshire accountants are calling on local businesses to keep their records up-to-date to avoid a backlash from HM Revenue and Customs.
Martyn Bramwell at Dyke Yaxley Chartered Accountants, in Shrewsbury, said keeping adequate business records not only helped to monitor the performance of a business more easily – but it was also a legal requirement.
“Under HMRC rules, you need to keep all the records required to enable you to make a complete and accurate tax return.
“Obviously the exact records you’ll need will depend on the kind of industry you’re in, but at the very least it will mean keeping a record of all the money travelling in and out of your business.
“All businesses, no matter what sector you operate in, will need to keep records of sales and takings, purchases and expenses.
“The records should also be detailed enough to enable revenue and capital expenditure to be correctly calculated, so that the appropriate capital allowances can be claimed.
“But it’s not just about your tax return – you can also use the records to analyse and discuss key areas of your business and its overall performance.”
Martyn said HMRC had also now revised its Business Records Checks system to tackle the issue of poor record keeping and therefore the loss of tax.
“If they suspect your business of holding inadequate records, the first step will be a letter followed by a telephone call from HMRC.
“They will ask questions about your records, and if necessary will refer your company to the Business Education and Support Team, or arrange a face-to-face visit.
“If you do get a visit, you will need to explain how your business is run and how records are kept. They will also check a sample of your records and suggest any improvements you should make, before arranging follow-up checks.
“Bear in mind though if you fail to step up your record keeping, you could face a fine of £500 for a first offence, although that would be reduced to £250 if you’re in your first year of trading.
“It really isn’t worth the risk of facing an investigation – keep your records straight from the start and you’ll reduce your chances of falling foul of the regulations.”
Dyke Yaxley’s Martyn Bramwell