Just before Christmas we mentioned that HMRC was under a bit of a media attack after accusations that it was ‘cosying up’ to big businesses and agreeing to secret tax settlements.
Well, only a few days into 2012 and it looks like its ‘batten down the hatches’ time at HMRC again. This time, the media storm centres on HMRC’s Business Records Checks (BRC), a new scheme which was piloted last year and one that aims to clamp down on accounting discrepancies by small businesses. Any business found to be at fault can expect a fine of up to £3,000.
On the face of it, BRC does not seem to match with the Government’s commitment to reducing red tape, a point that has been echoed by a large number of MPs and organisations such as the Federation of Small Businesses who accuse HMRC of harassment. For a small business the days of HMRC taking a relaxed approach to minor mistakes and allowing them to be rectified appear long gone.
Under BRC, HMRC was planning on inspecting over 20,000 businesses from April to check that their tax returns are backed up by correct paperwork going back a number of years. However, in the face of mounting criticism and political pressure it has promised to undertake a full strategic review of the project in consultation with relevant bodies.
This is good news but I would not expect the issue to go away completely. The current Government and economic climate is placing an increasing emphasis on tax take and as the UK seeks to balance its books this is only going to increase.
Of course well managed businesses have nothing to fear but this does demonstrate the benefit of having a close working relationship with your accountant and the importance of working with an accountant that knows your business intimately. If you are a ClearSky client, you can always approach your personal accountant to discuss any concerns you may have. They are a business savvy bunch by nature themselves and understand running a small business inside and out.
A quick reminder
Whilst we are on the subject of HMRC and keeping good records, don’t forget that the deadline for filing your online self-assessment tax return is Tuesday, 31st January 2012.
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Thursday, December 15th, 2011Some of Britain’s leading business organisations have thrown their weight behind a campaign calling on the Government to do more to tackle the issue of late payment which it says ‘decimates small firms’ cash flow’.
Amongst the group’s demands are requests for the Government to:
The group have some compelling stats to back up their calls. For example, 51% of small businesses report that the problem of late payment has become worse over the last year, 45% claim that it could threaten their ability to invest in their business and 20% claim that it could prevent them from continuing to trade.
Bacs has recently said SMEs are now owed a total of £33.6bn in outstanding invoice payments – a rise of 10% in the last 12 months and the highest figure since records began in 2007.
Ironically, the same study showed the UK’s SMEs managed to limit their late payment to an average of half a day.
For our clients, we always recommend that the first line of defence against late payment is to make sure that any contract you enter into with a client includes payment terms and that these have been discussed at the outset of the business relationship. Then, make sure that every invoice issued includes a reminder of said terms.
After that, communication is key. It’s vital that you contact the late payer immediately. Let them know straight away that money is due and that they haven’t paid according to your terms and conditions (which you made them aware of earlier).  Make sure that you keep this amicable but professional.
After that there are a couple of options depending on whether or not you want to go down the legal or non-legal route. Business Link has a really good guide on their website and, if you are a ClearSky client you can always speak to your personal accountant for some advice.
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