Preparing for business with ICAEW and X-Forces: Part 5
Part 5: Accounting records to satisfy the tax authorities
By Clive Lewis, ICAEW, in conjunction with X-Forces
Legally you have to keep accounting records for your business. This is so you can fill in your tax return and show the figures are right. Good records will help you to run your business more efficiently. Here we focus on accounting records needed to satisfy the tax authorities.
HMRC checks on tax returns
If HMRC has reason to suspect a self-assessment, Corporation Tax return or VAT return is incorrect, it will carry out a 'compliance check'. After investigation, it may issue an assessment or amend the relevant return to collect any unpaid tax. You can ask for a review of, or appeal against, most of HMRCís decisions, or ask for your appeal to be heard by an independent tribunal.
HMRC also carries out checks on how businesses keep their records. Initially, an HMRC representative might telephone you and ask questions to help establish whether you are keeping the business records you need to meet your legal responsibilities. They may arrange a suitable date and time for a visit to your premises. The consequence of a compliance check or 'a business records check' may be the business having to pay additional tax as well as facing penalties.
For more information, see www.hmrc.gov.uk/record-keeping/index.htm
Records for Value Added Tax (VAT)
Every business registered for VAT is required to maintain financial records that comply with the guidelines provided by HMRC.
For more information, see www.hmrc.gov.uk/vat/index.htm
Records for employers
HMRC requires every business that employs staff to keep proper records for Pay As You Earn (PAYE) and for the calculation of tax liabilities. With the introduction of Real Time Information (RTI), employers must advise HMRC of their payroll at the same time as making payment to employees.
For more information, see www.hmrc.gov.uk/paye
Limited company accounts
It is a requirement of the Companies Act that every company should keep proper accounting records of money received and paid, of all sales and purchases, and of assets and liabilities.
For more information, see www.gov.uk/running-a-limited-company/company-and-accounting-records
Ready to go?
Register for X-Forcesí start-up and business planning support today at www.x-forces.com Help for businesses can be obtained from ICAEWís Business Advice Service, in the form of a free, straightforward discussion with an ICAEW Chartered Accountant. Find out more at www.businessadviceservice.com
Case Studies See all
Tiffany joined the Territorial Army in 1997, moving to the Regular Army in 2000 until she left the Armed Forces in October 2017. Her final role was overseeing the procurement of medical equipment and...Read more »
7 years, 10 months
Natalie Chapman served as a LBdr in the Artillery, specialising in logistics, before leaving the Army in November 2015 after almost eight years of service, to seek a new career after a 'change in her...Read more »