Around 1,200 businesses will receive an early record check from HM Revenue and Customs (HMRC) in its first stage crackdown to check accounts are “accurate and adequate.”
Until now, HMRC has only inspected a firm’s tax affairs if it thinks the business could be paying too little tax. This is the first time inspectors will be looking at records for the current year.
According to Richard Mannion, national tax director at accountancy and financial services group Smith & Williamson, new businesses are more likely to be targeted.
He added: “HMRC will expect to see that a business is keeping full and accurate records of its invoices, receipts, petty cash, general expenses, and so on” and that “inspectors will be looking at records relating to the current year and potentially go back six years.”
Mannion also warned that “failure to comply with HMRC’s standards will lead to further inspections and some organisations will face fines.”
The move comes after HMRC estimated in February this year that around two million small and medium sized firms are failing to keep adequate tax records.
© Crimson Business. Ltd 2011