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>HMRC targeting SMEs with poor records

11/02/2011 By Mushroom Internet

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UK Business Advisors (UKBA) understands that HMRC have carried out a random enquiry programme from which they believe that 40% of SMEs have either inadequate or poor record keeping. They issued a consultancy document in December entitled “Business records checks” with a view to implementing a programme from the middle of this year to examine the books and records of some 200,000 small businesses. They anticipate raising an additional £600m in tax over four years – an average of £3,000 per company.

UKBA’s own research has found many commons problems such as:

· Poor evidence of expenditure such as missing key purchase invoices

· No documented dividend resolutions

· No minutes of key board decisions

· No records in support of journal entries like bad debts or disposal of major assets

· No directors service contracts in multiple-director companies

· Outsourced services not contractually written down or documented.

Any of these give HMRC an easy route into a company’s records and open up investigations.

Richard Terhorst, Specialist in the Financial Support arm of the UK Business Advisors said “HMRC have found a new hunting ground – taxpayers whose records are poor. We strongly recommend that businesses with concerns about their records get in touch with us. We’ll give you a health check. It could save you a lot of grief and cost in the future.”

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Filed Under: Business Planning Tagged With: dividends, records, SGBA, SMALL BUSINESS, SMEs, Tax

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