Plans by HMRC to scrutinise the record keeping of smaller firms could prove costly for many enterprises, it has been claimed. In its response to HMRC’s consultation on the proposals, the Institute of Chartered Accountants of Scotland (ICAS) said that the plans are flawed.
Under the new regime, as many as 50,000 small businesses could come under HMRC scrutiny as a way of making sure their business records meet minimum reporting standards. If not, a fine of up to £3,000 could be imposed. However, ICAS argued that HMRC’s assumptions about the spread of poor record keeping among smaller firms are unsubstantiated and that the estimated costs of the scheme are being massively understated.
HMRC has calculated that each visit, on average lasting half a day, would cost a business £54. ICAS, on the other hand, believes that, given the level of disruption that a visit will entail, the actual cost will be ten times as great, approaching somewhere nearer £560.
Ian Dewar, convenor of the ICAS small business tax sub-committee, said that the attitude of the tax authorities that SMEs with poor records have chosen to have poor records is a misconception. He continued: “Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape. Typically they don’t go into business because of their record keeping skills. “HMRC should be looking for positive ways of encouraging taxpayers to maintain adequate records, rather than adopting a big-stick approach that we believe will cost owner managers a lot of resource that could have been better directed towards growing their businesses.”
Please don’t forget that we are here to help you and your business cope with the pressures of good, accurate and up-to-date record keeping. Outsourcing the work can free you up to focus on developing your enterprise.