Despite promising a 'light touch' to mistakes made in the process of implementing the 2.5% VAT rise, HMRC is planning to fine businesses with 'significant record-keeping failures', as well as probing likely unpaid taxes. Fines could reach more than £3,000, the Federation of Small Businesses (FSB) has warned.
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.
FSB accountancy adviser Matt Holmes advised small firms who were struggling to keep their finances in order to seek help as soon as possible. "Make use of freelance bookkeepers or virtual assistants. There will be a cost involved, but you will be buying peace of mind and precious time to concentrate on making money for your business," he said.
HMRC recently extended its Business Payment Support scheme for the duration of the present Parliament.