HMRC to fine small and medium sized businesses up to £3,000 for failing to keep proper records

16 January 2012 |

HMRC has announced that it is to target 40% of the UK’s 4.9 million small and medium sized businesses which engage in poor record keeping and where HMRC expect that unpaid tax is likely to be due.

HMRC intend to investigate 50,000 businesses a year, starting in the second half of 2011, and to impose penalties for ‘significant record keeping failures’.

While there is no definition of unsatisfactory book-keeping HMRC has given the following examples for Inspectors:

  • Untidy and unanalysed records not supported by an analysis book
  • Analysis books not kept up to date
  • Significant unanalysed and un-vouched round sums
  • Cash books not kept up to date

HMRC also said that where assets have a mixed business and personal use the business must be scrupulous in recording business and personal usage.

As small and medium sized businesses have to keep records for a number of different taxes including income tax, PAYE and VAT and there are separate penalties for each, then small and medium sized businesses could find themselves liable for a number of different penalties relating to their poor record keeping.

Records must be kept for at least 6 years.

For further information or to discuss the issues raised, please contact Guy Abbiss  or Stephen Wright on +44 20 3051 5711


Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

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