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Poor records clampdown slammed as a money-making exercise

THE Federation of Small Businesses (FSB) has warned that the new drive by HM Revenue and Customs (HMRC) to clamp down on poor bookkeeping among SMEs will be used purely as a revenue-raising exercise by the Government.

The Business Records Checks initiative is expected to target 50,000 small businesses in spot checks to see if their business records meet the minimum reporting standards.

If not, a fine of up to £3,000 will be levied, with the potential to raise £600m over the next four years.

The FSB believes that the consultation lacked information on how HMRC would choose businesses and carry out the checks.

Roger Bibby, the FSB’s economic, tax and finance committee chairman, said: “FSB research has shown that one in 10 small firms spends more than six hours per week fulfilling their tax responsibilities.

“However, many small businesses do not have a dedicated finance or accounting department and will be unaware of the intricate details of tax obligations – especially when starting out.”

The FSB recommends that the charging process is left as it currently stands, and that small firms are given the opportunity to improve their records if processes are deemed inadequate.

It believes it would be unfair to impose a ‘first offence’ penalty, where the business is unaware of the offence that has been committed.

The FSB say that guidance should also be produced, so that all small businesses know what actions they can put in place to ensure they are compliant.

He added: “At a time when the Government is looking to promote growth and get the recovery on a firmer footing, adding to the bureaucracy that a business owner has to deal with through additional checks, goes against what the Government is trying to achieve.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .