The consultation ‘Business Records Checks’ by HM Revenue & Customs (HMRC) states that 50,000 small businesses will be targeted by HMRC agents in order to check that their business records meet minimum reporting standards.
If not, a fine of up to £3,000 will be levied, with the potential to raise £600 million over the next four years.
The FSB is concerned that the consultation lacks information on how HMRC would choose businesses and carry out the checks.
Another worry is that HMRC has not drawn up details of what standard criteria would be used to assess each business, and that it will be difficult to justify a ‘significant failing’, as firms across sectors differ so much.
FSB finance committee chairman Roger Bibby says, ‘Rather than imposing fines which could cripple some small firms, it would be more pertinent for HMRC to move to a system where small businesses are encouraged to improve record keeping and understand their tax obligations better.
‘At a time when the government is looking to promote growth and get the recovery on a firmer footing, adding to the bureaucracy that a business owner has to deal with through additional checks goes against what the government is trying to achieve.’