Up to two million small and medium sized business that fail to keep up-to-date records and are likely to pay taxes late face fines of up to £3,000, under a new scheme to be launched by HM Revenue and Customs (HMRC) this year.
HMRC’s consultation plan, Business Records Checks, runs until 28 February 2011 and focuses on the introduction of penalties to encourage better record keeping.
These plans – afforded under the Finance Act 2008 – give greater powers to HMRC, but sadly such legislation and its implementation will probably affect small businesses worse than any other group.
I can’t see how the government is supporting small businesses or how this legislation benefits HMRC as the fine is quite penal.
A lot of small businesses are run by owner managers that don’t have any bookkeeping skills so they have to employ somebody else.
They tend to do their bookkeeping less frequently than big businesses; probably once every three months or once a year if they are not VAT registered because they’re trying to keep costs down.
What’s sad is the small business sector lacks unity and therefore can’t bring about any real challenge to the implementation of schemes such as these.
Unlike big businesses that have lobby groups that influence and change government policy, they don’t join forces and put money together to bring a political party to power, so they have very little leverage.
Traditionally, Tory governments rarely support small businesses, even though they’re the engine of the economy. Tories know they don’t have to support them because they will always be there.
Unfortunately, this is the folly of small business owners and when these new proposals come into force, HMRC will make them pay for it.
Contact Insolvency and Law now for free and confidential advice on how to deal with the tax man.