KBZine-Logo-9.png

 

KBzine: the original kitchen and bathroom industry e-newssince 2002
22nd September 2017

 

We strongly recommend viewing KBzine full size in your web browser. Click our masthead above to visit our website version.

 

Search
English French Spanish Italian German Dutch Russian Mandarin


Firms advised that proper book-keeping is essential to avoid £3,000 fine

Small businesses say Her Majesty's Revenue & Customs should get its own house in order following reports of poor service !

The Forum of Private Business is warning small firms to keep proper financial records or face fines of more than £3,000.

Despite recently promising a 'light touch' approach to mistakes made in the process of implementing the 2.5% VAT rise, HMRC is planning to clamp down on firms for what it calls 'significant record keeping failures', as well as probing likely unpaid taxes.

Firms are expected to keep records going back at least six years. Information including invoices, bank statements, receipts and cheque stubs will have to be supported by up-to-date accounts books and detailed analysis.

The Forum's Accountancy Adviser, Matt Holmes, who is the Managing Director of Liquid Accounts, warned firms to be prepared.

"HMRC is planning to clamp down on small businesses tax payments and record keeping from the middle of 2011," he said. "But it is important that firms act now to get their houses in order - for many this will represent a lengthy administrative headache.

"Obviously entrepreneurs will want to make sure they are not caught out and hit in the pocket at a time they can least afford it, but the key is to focus on creating business intelligence that you can use to your benefit, rather than just keeping records for the tax man because you have to."

Writing in the Forum's member newsletter, Matt's three top tips to business owners for better book-keeping - and avoiding a hefty fine - are:

* Seek advice - if you are struggling for time or don't have the expertise, make use of freelance bookkeepers or virtual assistants. There will be a cost involved but you will be buying peace of mind and precious time to concentrate on making money for your business. 

* Embrace mobile technologies - there are smart phones and numerous apps to enable you to keep on top of your finances, including one that allows you to photograph and record expense receipts. 

* Consider new, cost-effective online accounting packages that allow you to store and analyse much more information compared to older desktop programmes and manual filing systems. 

"HMRC's decision to clamp down on struggling firms rather than provide further support to help them is unfortunate but it is a fact that small businesses are much more likely to succeed by keeping good accounting records. It allows them to keep on top of their cash flow and plan ahead.

 "Most online accounting packages will let your accountant and bookkeeper access accounts remotely, which gives you the choice of doing as much or as little of your own accounting as you're comfortable with or can afford. 

"It also means that they can be on hand to help you solve problems or rectify mistakes and to give you advice throughout the year and not just at your year end. And doing things this way might also save you money on your accounting bills as there will be less for your accountant to do at key times." 

In 2008, HMRC launched its Business Payment Support scheme, which has recently been extended for the duration of the present Parliament. Popularly known as 'Time to Pay', the scheme allows struggling businesses to defer tax payments.

However, recently business owners have expressed concerns that HMRC is taking a harder line despite the fact that they are willing - but unable - to pay.

Forum member Geoffrey Rogers, of Geoffrey Rogers Chartered Accountants and Tax Consultants in Plymouth, believes small firms - charged with creating jobs and driving economic growth -  want to comply with their tax requirements but are not being given enough support to do so.

"With banks still not lending, late payment on the up and other factors hitting cash flow, many small businesses are still facing an incredibly tough financial climate and signs that HMRC is set to pull the rug from under them are worrying," he says. 

"It's typical that HMRC is going to fine small businesses for not keeping 'proper records' when it does not offer any real definition of what this means. Without clarification, and certainly without better education, in many cases, fining small businesses for poor record keeping would be like punishing a child with learning difficulties for poor reading. 

"Once again we are looking at the big stick being favoured instead of the carrot, which is, I'm afraid, typical of HMRC's current approach.

Many entrepreneurs will be dismayed that HMRC is taking a tougher approach to small business administrative issues when it appears to have many of its own.

The Forum's submission to the Treasury sub-committee inquiry into 'the administration and effectiveness of HMRC' identifies numerous weaknesses in the organisation's service.

Forum members believe HMRC's administration of the UK's tax system affecting small businesses is slow and inefficient, with many online systems deemed too complicated, and have called for reforms to PAYE, the speed of HMRC's internal procedures and the treatment of customers.

The Forum is also calling for a major root-and-branch simplification of the tax system to make it easier for small businesses to negotiate their tax responsibilities - which HMRC says is its 'main aim'.

In addition, the Forum has recently urged the Government's probe into tax avoidance to address a VAT loophole where large companies are able to relocate to the Channel Islands in order to avoid paying VAT, distorting competition with smaller firms and amounting to tax abuse. 

The Forum has joined forces with Liquid Accounts Ltd to provide small businesses with the ability to manage their finances and accounting systems using leading online accounting software and cloud computing technology. Forum members have access to a range of exclusive benefits.

T: 0845 612 6266

W: www.fpb.org

14th January 2011




© The KBzine 2017.
Subscribe | Unsubscribe | Cookies | Sitemap