Business Records Checks

[pawncob]

As far as I can see, the legislation requires that adequate records must be kept to enable a "customer" to complete their tax return in an accurate manner. The article in Accounting Practice this month says that HMRC expect reords to be written up at least once a week, but I can't find the factsheet (TH-FS11) on HMRC's site. This is the best I can find.

http://www.hmrc.gov.uk/factsheet/record-keeping.pdf

My client is VAT registered (annual accounting) and his records are maintained on an annual basis. Cash Book/PCB etc are written up at the end of the year to enable accounts to be prepared. Debtors/Creditors are dealt with monthly, as is PAYE. This complies with HMRC's definition of adequate records, but not the frequency requirement. Anyone see any problems with this?

[mullet]

The article in Accounting Practice this month says that HMRC expect records to be written up at least once a week

Was this written by someone in HMRC who has never run a business? Probably. HMRC Inspectors often think that Joe the plumber gets home after a busy week, and instead of having dinner and going to the pub he sits down with his invoices, receipts and cash book. Yeah, right.

If the individual can deliver returns that are correct and complete - and could be supported by adequate underlying records through the enquiry process - then I don't think that HMRC could have any basis to criticise the record keeping.

Personally, I would worry a little about a CB being written up annually - what if the underlying records are lost or destroyed? If a CB is written up monthly, at least there is some protection against data loss. Or in this case are all the records computer-based? Not so bad as long as backups are reliable. I think scope is important too - 12 invoices a year, or 20 invoices a day? Basically a one-man band with a handful of employees? Fewer than 10 customers and suppliers, or 100 of each? There will never be a simple answer!