Firms urged to keep better records on tax

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Accountants are urging small and medium sized firms in Sheffield to sharpen up their act after a HM Revenue and Customs check found more than half could have inadequate records.

Sheffield was one of eight pilot areas targeted by the taxman to check on the adequacy of business records being kept by SMEs.

According to accountants Grant Thornton, the taxman found that 12 per cent of SMEs in the test areas had “seriously inadequate records” while a further 44 percent had records which might require some attention.

Andy Maxfield, senior manager in Grant Thornton’s Yorkshire tax investigation team, said: “These are significant figures and the large number of businesses in Yorkshire that are now on the HMRC radar need to take this as a warning to sharpen up their act and ensure that they change their procedures and produce compliant and adequate records going forward.”

As a result of the pilot, HMRC has announced that it is to check SMEs nationwide from the start of next year.

“Businesses need to be aware of this new stance and work with professionals to ensure that their record-keeping is compliant,” said Mr Maxfield.

“For those who have already had a visit, it is essential that they take immediate advice about how to remedy deficient records and address HMRC’s perception of them as a ‘problem’ business.”

HMRC has said that, long term, it intends to issue penalties of up to £3,000 for serious inadequacies in record-keeping.