Business News

Business Records Checks Consultation Focuses on SMEs

HM Revenue & Customs (HMRC) is seeking views on how best to implement a programme of Business Records Checks, designed to improve record keeping in small and medium-sized enterprises (SMEs).

HMRC says that although keeping adequate and accurate business records allows businesses to comply properly with their tax obligations, its random enquiry programme suggests that poor record keeping is a problem in around 40 per cent of around five million SME cases.

With research indicating that poor business record keeping generally leads to an underassessment of tax, HMRC estimates that it could be losing out on tax payments in up to two million SME cases annually.

HMRC says: “The loss of tax through poor record keeping, particularly in the current economic climate, cannot continue and HMRC is, therefore, determined, to use the powers at its disposal to improve business record keeping.”

HMRC wants to check the business records of up to 50,000 cases annually, beginning in the second half of 2011, and impose penalties for significant record keeping failures.

The consultation focuses chiefly on how best HMRC can implement a programme of Business Record Checks, which it says will bring potential benefits for businesses including improved financial management, which in turn will improve firms’ chances of business success by providing better information for decision-making.

LINK: Consultation document