I haven't seen an enquiry at my practice for at least 2 years but that's all about to change. HMRC are targeting 50,000 small businesses each year and they are planning to check your record keeping for accuracy! You must keep till rolls, sales and purchase invoices, paying in slips, cheque stubs and bank statements for 6 years.
If HMRC assess your records as inadequate they can fine you £3k. They will probably start an investigation into your previous years’ tax returns as well. After all you've just given them a good excuse to doubt the accuracy of your records.
Over the years we have seen several investigations, all on small businesses. In one case this resulted in the client owing HMRC £10k. I didn't handle this investigation for this particular client as he had other insurance. However after reviewing the case myself I think I would have got a better result.
These investigations can drag on for years and can result in hefty fees for the work your accountant does for you, even if no tax is due. Another client had 3 investigations over 3 years. However none of these resulted in extra tax due but they still had to pay our fees to argue and negotiate with HMRC on their behalf.
The vast majority of successful businesses keep in close touch with the numbers in their business and revisit them regularly. This means that they not only remain compliant but are able to act on things very quickly to keep their business in good health.
However, you don't have to do it all yourself, ask your accountant or get a good book-keeper. Just make sure you can access your information quickly and easily or have regular meetings with your accountant to look through your management accounts and discuss how the business is doing. There are other things you could measure that will tell you how your business is doing and how it will do in the future. I'll talk about that in my next blog.
So please make sure you’re keeping accurate records. I'm so committed to helping you keep on track that I want to offer you a free health check on your record keeping - normal cost £185 + VAT. Want to find out more? Ask carolann@murrayassoc.co.uk or give her a call on 0141 889 4247 or 01224 432184.
I'm running my regular Business Growth Clubs specifically on Knowing Your Numbers in Glasgow on 21st April and then in Aberdeen on 19th May and I'd love to see you at one of the events.
The first one is free. To book a place email carolann@murrayassoc.co.uk or via our website http://www.murrayassociates.co.uk/events.htm
