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Robust record keeping now more important than ever

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Thursday November 8, 2012 at 9:00am
Are you entirely confident that your financial record keeping is robust? If not, then now is the time to urgently get things in order as HMRC rolls out an enhanced record checking process for SMEs.

I wrote with some scepticism in my blog last year about Business Record Checks brought into play by HMRC after they felt research by OECD suggested poor business record keeping is responsible for a loss of tax in up to 2 million SME cases annually.

Over the last year, HMRC has consulted over the best way to deliver its enhanced record checking programme for SMEs. The new programme launched on 1 November and will be rolled out in stages by region over the next 3 months.

The main thrust says HRMC will now offer a new step-by-step approach, with a much greater emphasis on education and support.

So what’s involved? HMRC will write to businesses thought to be at risk of poor record keeping, followed up by a telephone questionnaire to assess cases further. If things are found to be lacking, HMRC can offer tailored educational support and a possible visit. A follow up visit is carried out about 3 months later to check for improvement but if this hasn’t happened there is the chance of a penalty.

And so it’s clear that one thing hasn’t changed. The buck stops with the business owner when it comes to ensuring adequate record keeping that shows tax responsibilities are being met.

For those who fall short, it could open up a very costly exercise in terms of time dealing with further enquiries and ultimately, for those who don’t improve, a fine by HMRC. And so if you answered ‘no’ to my opening question in this blog, then now is the time to get record keeping under your control.

Business affairs can seem daunting, especially for hard-pressed small business owners trying to stay afloat in a recession. But help is at hand!

Draw on expertise - consider handing over your financial management to an accountant. This frees up your time to devote to your business and their expertise will ensure you cover all that HMRC needs, avoiding unnecessary time-consuming enquiries and penalties.

Use the right tools for the job - maintaining your accounts via Xero on-line accounting takes a lot of the drudge out of record keeping. Plus (and it’s a big plus) you are able to access up-to-date information rather than rely on historical quarterly data, enabling you to manage your business more proactively.

Andy Parker
Chartered Accountant, Birmingham

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Parker Chartered Accountants and Financial Advisors is the trading name for PLW Advisors Ltd (Registered No. 10396831), and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here