It's about time law enforcement got as organised as organised crime - Rudy Giuliani.
It's been a while since we blogged here with all things being at bit hectic post Budget 2011. We're back now though and alas, not with good news. As the Telegraph reported yesterday, HMRC has begun its record checking of small businesses. HMRC released a consultation document back in December (Consultation on Business Record Checks) on how it would undertake a planned review of more than 200,000 SME's; the background to the review was that HMRC believed nearly 5 million SME's had poor record keeping practices.
Now it has emerged that HMRC has commenced a pilot run on 1,200 SMEs even though HMRC originally stated that the checks would not commence until June. The Chartered Institute of Taxation (CIOT) is understood to have raised an objection to the early move and lack of involvement of professional advisors but HMRC says the idea of a test run had been raised during consultations on the programme.
The silver lining as reported by the Telegraph is that HMRC's Inspectors have been advised not to use their penalty powers during this pilot unless there is a blatant abuse of the tax regulations. Once the main scrutiny kicks off in earnest, don't expect such leniency as HMRC anticipates it will raise an additional £60 million for the Treasury over the next 4 years.
If you have concerns regarding your record keeping, HMRC’s guidance is available here and you should consider seeking professional advice.