The Government’s drive to make businesses tidy up their tax and record-keeping is moving up a gear.
HM Revenue and Customrs are now starting to visit small and medium businesses and check that all tax related records for VAT, PAYE, NIC, corporation tax, expenses and any other taxes – are "adequate and accurate" ie comply with legal requirements.
HMRC will expect to see that a business is keeping full ,accurate and contemporaneous records - invoices, receipts, petty cash, general expenses, work diaries etc. Depending on the size of the business, they may expect to see reconciled cash books/ ledgers etc as well.
The Law required that all those running a business must:
- Retain records ( invoices, bank statements, cheque stubs etc) going back at least six years.
- If there is an apportioment of an expense betweeen business and private use ( such as for a car), there is the necessary paperwork to back up the split
- The record keeping up is to date
- If records include estimates, there is evidence to support the figures used.