HMRC are planning a programme of business records checks to review both the adequacy and accuracy of business records in the small and medium enterprise (SME) sector and are consulting on how best to implement such a programme. A consultation paper has been published and is available to download on the HMRC website. Comments on the proposals are sought by 28 February 2011.
Research indicates that record keeping is poor in approximately 40% of SMEs and this leads to an underassessment of tax. HMRC plan to check around 50,000 records annually, starting in the second half of 2011 with a view to improving record keeping and reducing the associated loss of tax. Penalties would be imposed for significant record keeping failures.