The 31st January deadline for filing your Self Assessment return for last year and paying all tax due is looming large, but how many of us are aware of the sweeping penalties now being generated for all prior years as well as the 2011-12 tax years?
The blanket amnesty ended on 2nd October 2012 since when, if you have not submitted your tax returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any unpaid tax and NICs. Penalties of up to 100 per cent of the tax due, or even criminal cases could follow. With Government borrowing still a hot topic we can expect to see these penalties and fines increasingly utilised.
The second pressing reason is the return of HMRC Spot Checks. According to HMRC more than two million small business owners could be keeping inadequate records, which in turn typically lead to an under-assessment and payment of tax. It is because of this that HMRC is introducing compliance spot checks on the SME sector (Small and Medium Sized Enterprises).
In the first instance HMRC are trialling a new single compliance process across ten areas within the UK. The trial commences in November 2012 and will run for six months, before being rolled out county-wide, subject to the trial results. The South West is the February 2013 target so you could be getting a call from the men in bowler hats any day now.
It’s not just about raising money though, alongside the threat of fines, it is paramount small business owners are pro-active in getting their books in order as poor record keeping is also one of the top five reasons why small businesses fail. It can also help to accurately reflect your costs and reduce the tax you have to pay!
Barbara Harris offers Finance, Accountancy & Support Services for small businesses and is a Fellow of ATT. Call her on 07896 204 857
