Mitchell Charlesworth warns small firms warned over HMRC crackdown

A leading North West accountancy firm is urging small firms to review their accounting records after HMRC announced it is launching a crackdown on what it calls 'significant record keeping failures', as well as probing likely unpaid taxes.

Mitchell Charlesworth, which has offices in Liverpool, Manchester, Chester, Widnes and Warrington, said HMRC is planning 50,000 spot checks on firms across the UK in the second half of 2011 to assess the standard of book keeping. According to HMRC 40% of all small and medium-sized businesses - about two million - are guilty of poor record-keeping.

Mitchell Charlesworth partner Tim Adcock said firms will receive a visit from HMRC similar to a VAT inspection and if book keeping mistakes are found firms will face fines of up to £3000.
"This is a serious issue for owner managers," he said. "Managing finance can be one of the toughest challenges facing small businesses simply because they do not have in-house expertise. In the North West there are 440,000 SMEs and of those 95pc have fewer than 10 employees. So for the vast majority of small businesses they do not have in house finance experts so errors can be made quite easily and innocently. "

Mr Adcock urged firms to move fast to get their house in order as the process could be time consuming and disruptive to businesses needing to focus on selling and client handling.

"The more time you give to preparation the less disruptive it will be," he said. "Firms are expected to keep records going back at least six years. Information including invoices, bank statements, receipts and cheque stubs will have to be supported by up-to-date accounts books and detailed analysis."

Mr Adcock said although HMRC's actions will not be seen as business friendly he said there is no doubt that having properly managed accounts makes business growth planning much easier.
"A good SME focused accountant will be able to offer advice on the latest technology to help make financial management as simple and efficient as possible," he said. "Most online accounting packages will let your accountant and book keeper access accounts remotely, which makes the process easy to manage.

"Moreover not only does that mean they can pick up errors critically it enables them to give you advice throughout the year and not just at your year end.  Too many accountancy firms do not offer proper business growth advice. By having properly managed financial records your accountant should be offering regular business advice - not simply end of year accounts which is inadequate for many entrepreneurs. An accountant should be helping drive the business with a constant flow imaginative and dynamic business advice - based on your financial performance and potential."

For further advice contact Tim Adcock Email:

Post a comment

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business