HMRC has unveiled plans to target small businesses keeping inaccurate trading records.
The initiative to investigate and penalise up to 50,000 SMEs a year could bring in up to £600m in fines for the government.
Initial plans see HMRC examining full sets of company records – to include cheque stubs, till rolls, sales and taking records and bank and credit card statements – dating back over the last six years.
The penalty imposed for records that are deemed not to be “accurate” or “adequate” would be up to £3,000; with SMEs also facing formal tax enquiries.
“HMRC’s plans to investigate the financial records of SMEs is an ominous sign at a time when entrepreneurs are already under great pressure in a fragile economy,” says Ronnie Ludwig, partner in the private wealth group at accountancy firm Saffery Champness.
“This is an interesting shift of focus for the taxman as, historically, fines for poor record-keeping have been very rare.
“Companies should take note, however, and ensure that financial records are accurate and up to date. This will ensure that you avoid penalties and fines, and will also help you to keep a better gauge of your company’s financial well-being as you navigate through turbulent economic times.”