HMRC have recently announced they are exploring new ways of conducting their business record checks to target those who are likely to have inadequate business records.
According to HMRC, it is important for businesses to keep records in order to complete their tax returns correctly, and to ensure they pay the correct amount of tax at the right time to avoid any interest or penalties.
Good record keeping could also:
- help bids to obtain finance (eg. loans, mortgages)
- give you the information you need to manage your business and plan for the future
- help you budget for future plans and tax payments
- reduce accountancy fees if you provide your accountants with well organised information
- support your claims to some reliefs or capital allowances
- help you keep track of amounts you owe to suppliers, or that customers owe you.
Three simple steps to bookkeeping:
1. Set up a system – whether it be a manual book or computerised package. It helps to have all the information kept together.
2. Keep records throughout the year – only keeping some of your records is as bad as keeping none at all. Keep your records updated regularly, rather that letting it pile up
3. Keep your records for as long as required – certain records must be kept for a minimum period, for example 6 years for VAT or 5 years for Self Assessment.
Failure to keep proper records could result in penalties from HMRC if you are subject to a business record check, and could prove detrimental if you are subject to an investigation from them.
If you would like any help with your bookkeeping, Green & Co has a dedicated VAT and bookkeeping department, who specialise in Sage. If you would like any further information, please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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