Despite recently promising a ‘light touch’ approach to mistakes made in the process of implementing the 2.5 per cent VAT rise, HM Revenue & Customs is planning to clamp down on firms for what it calls ‘significant record keeping failures’, as well as probing likely unpaid taxes.
Companies are expected to keep records going back at least six years. Information including invoices, bank statements, receipts and cheque stubs needs to be supported by up-to-date accounts books and detailed analysis.
The Forum’s Accountancy Adviser, Matt Holmes, says, ‘HMRC’s decision to clamp down on struggling firms rather than provide further support to help them is unfortunate but it is a fact that small businesses are much more likely to succeed by keeping good accounting records.
It allows them to keep on top of their cash flow and plan ahead.’