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HMRC are attempting to draw the attention of sole traders and small businesses to information aimed at helping firms keep appropriate records, in advance of the launch of the department's business record checks programme.
The literature incude:
- Keeping records for business: a basic guide.
- A general guide to keeping records for tax returns.
- Setting up a basic record-keeping system, with examples of spreadsheets.
- What records should be kept.
The Revenue's planned checks initiative ‘marks a change and a hardening attitude’, said Richard Mannion, Smith & Williamson’s national tax director.
‘Business owners should take these warnings seriously. If they don’t keep good records they may be unable to substantiate tax returns, and so would have difficulty in proving their figures are correct, should HMRC take issue with them,' said Mr Mannion.
He added the minimum steps business people need to take to be organised and methodical in their record-keeping:
- Keep records going back at least six years.
- Retain invoices, bank statements, paying in books, details of purchases, expense details and so on.
- Be scrupulous in allocating personal and business usage and have the necessary supporting paperwork to back up their claim.
- Be up to date.
- Avoid estimates.
HMRC should first of all ensure that the law is clear and precise as to taxpayers obligations. At present they have the discretion on this subject. however if you talk to leading tax counsel who may also be a tribunal judge, then you will receive the answer " that it is for them to decide and not HMRC". The problem of course is the time and expense incurred to obtain such a decision.
HMRC should be asked whether that the intention is to raise revenue by way of penalties an interest. If you then look at ECJ decisions then one will find sympathy for the taxpayer.