February 2011

How well kept are your records?

HMRC’s increased powers now state that an officer of HMRC may check that ‘statutory record keeping requirements are being met’ as part of any compliance check.

There are now potentially moreserious issues at stake than a slap on the wrists for keeping poor records.

The key points to consider are

If an officer believes that the quality of the records are poor enough to mean that the figures on the tax return cannot be relied upon then they could look to make an assessment for under declared profits.
Record keeping can be used in the guidance of whether or not an individual has taken ‘reasonable care’. This term is used in many of HMRC’s new penalty regimes. Not taking ‘reasonable care’ can increase the percentage penalty that can be levied upon you along with increasing the potential period of assessment (from 4 to 6 years).
By law, it is up to the business owner, however limited their abilities, to keep sufficient records to show that any tax return prepared by them is correct and complete.

VAT rate change

From 4 January 2011, the standard rate of VAT increased from 17.5% to 20%. There are specific rules for services supplied during the rate change but it is important to note the tax point of each invoice you raise.

In addition to the standard rate of VAT change, companies using the flat rate scheme will also see an increase in the rate they use.

If you are unsure about anything regarding the VAT rate changes then we will be happy to help.