ICAEW and X-Forces Business Advice Series: Tax For Small Businesses

Accounting records to satisfy the tax authorities

Legally you have to keep accounting records for your business. This is so you can fill in your tax return and show the figures are right. Good records will help you run your business more efficiently. The remainder of this article focuses on the accounting records to satisfy the tax authorities.

HMRC checks on tax returns

If HMRC has reason to suspect a self-assessment, Corporation Tax return or VAT return is incorrect, they will carry out a “compliance check”. After investigation, HMRC may issue an assessment, or amend the relevant return to collect any unpaid tax. You can ask for a review of, or appeal against, most of HMRC’s decisions or ask for your appeal to be heard by an independent tribunal.

HMRC also carry out checks on how businesses keep their records. Initially they might telephone you and ask questions to help them establish if you are keeping the business records you need to meet your legal responsibilities. They may arrange a suitable date and time for a visit to your premises. The consequence of a compliance check or “a business records check” may be the business having to pay additional tax as well as facing penalties.

More information:

http://www.hmrc.gov.uk/record-keeping/index.htm

Records for Value Added Tax (VAT)

Every business registered for VAT is required to maintain financial records that comply with the guidelines provided by HMRC.

More information:

http://www.hmrc.gov.uk/vat/index.htm

Records for employers

HMRC requires every business that employs staff to keep proper records for Pay As You Earn (PAYE) and for the calculation of tax liabilities. With the introduction of Real Time Information (RTI), employers must advise HMRC of their payroll at the same time as making payment to employees.

More information, visit

www.hmrc.gov.uk/paye

Limited company accounts

It is a requirement of the Companies Act that every company should keep proper accounting records of money received and paid, of all sales and purchases, and of assets and liabilities.

More information, visit

https://www.gov.uk/running-a-limited-company/company-and-accounting-records

Register for X-Forces’ start-up and business planning support today through our website, www.x-forces.com/contact  Help for businesses can be obtained from ICAEW’s Business Advice Service. This is a free straightforward discussion with an ICAEW Chartered Accountant. Further information can be found at www.businessadviceservice.com

Article by Clive Lewis, ICAEW in conjunction with X-Forces.