Business News

Keep Proper Records!

HMRC have recently issued a reminder about the various ‘toolkits’ that they have developed to assist agents when preparing returns. Although the toolkits are aimed at tax professionals, they highlight common errors and the steps that can be taken to reduce those errors. The first series of toolkits cover:

  • marginal small companies’ relief;
  • capital allowances for plant and machinery;
  • personal and private expenditure;
  • capital gains tax for land and buildings; and
  • capital gains tax for trusts and estates.

The intriguing thing about all of the toolkits is that the main area of risk for all the above areas is record keeping or the lack of it!

In addition, for capital allowances for plant and machinery the main areas of risk include:

  • record keeping e.g. different proportions of non-business use during the period of ownership and detailed records of all acquisitions and disposals;
  • acquisitions and disposals e.g. whether the asset qualifies for capital allowances; and
  • non-business use of assets, particularly cars.

For private and personal expenditure, the main areas of risk are:

  • record keeping e.g. non-business expenses being incorrectly recorded or misposted in the business records and claimed in error as allowable expenses;
  • personal bills being paid by the business;
  • travel and subsistence;
  • entertaining, gifts, subscriptions and sponsorship; and
  • drawings and capital account.

So the moral is clear – good records today keep the taxman at bay. If you would like to discuss this area in more detail, please do get in touch.

Internet Link: HMRC website