Out-Law News 1 min. read
26 Sep 2011, 10:25 am
However penalties for inadequate records will only be issued in the most extreme cases until the process is refined. Full guidance will be issued before penalties of up to £3,000 for serious record-keeping inadequacies will be charged, HMRC said.
HMRC's Business Records Checks programme was piloted in eight towns and cities across the UK earlier this year including Edinburgh, Liverpool and Manchester. It involves checks on adequacy of the records of small and medium-sized businesses.
The pilot programme turned up errors in the record keeping of around 44% of businesses, according to HMRC figures. 12% of companies visited had "seriously inadequate" records.
HMRC plans to complete 12,000 checks before the end of the current financial year and will decide whether to extend the programme nationally in 2012.
Richard Summersgill, HMRC's Director of Local Compliance, said the exercise was intended to support businesses and reduce the 'tax gap' in the UK.
The tax gap is the difference between the tax that in theory should be collected by HMRC and the amount that is actually collected.
HMRC recently announced a tax gap of around £35 billion for financial year 2009-10. This figure represents 7.9% of liabilities - slightly less than in 2008-09 when it was 8.1%, according to HMRC figures.
"Good record-keeping helps businesses pay the right amount of tax at the right time, thereby potentially avoiding interest and penalties. Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success," Summersgill said.
