Self-employed face fines for sloppy records

The self-employed are among the small businesses being warned to keep proper and practical records of their tax and finances if they want to avoid a £3,000 penalty.

Despite recently promising a ‘light touch’ approach to mistakes in adjusting to the VAT rise, business advisors say the taxman is set to clampdown on ‘significant record keeping failures.’

Issuing the warning, the Forum of Private Business signalled that limited companies are among the firms that HM Revenue & Customs expects to retain their records for at least six years.

Information including invoices, bank statements, receipts and cheque stubs should be supported by up-to-date accounts, books and detailed analysis, the forum said.

Without these, the middle of this year is expected to be tough for such traders, as from that period onwards the Revenue is due to scrutinise smaller companies’ tax payment and record-keeping status.

Accountant Matt Holmes, managing director of Liquid Accounts Ltd, offered three tips to business owners for better book-keeping – and how to reduce the chance of being hit with a hefty fine.

1/Seek advice

If you are struggling for time or don't have the expertise make use of freelance bookkeepers or virtual assistants. There will be a cost involved but you will be buying peace of mind and precious time to concentrate on making money for your business.

2/ Explore apps

There are smart phones and numerous 'apps' to enable you to keep on top of your finances, including one that allows you to photograph and record expense receipts.

3/Cloud accounting?

Consider new, cost-effective online accounting packages, often capable of storing and analysing much more of your information compared with older desktop programmes and manual filing systems.

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