At a time when HMRC have made their intention clear in respect of investigating any suspected tax avoidance or evasion, Shout 99 have been speaking to accountancy group Smith & Williamson who have some advice for any new businesses and self employed individuals. Their advice pertains to record keeping in all aspects of their tax affairs including VAT.
Smith & Williamson’s national tax director, Richard Mannion, commented: “In light of the recently announced tax gap of £42billion and the pressure on public finances, the taxman will be wanting to recoup funds as soon as it can from people and businesses who have under-paid their tax. Besides, the taxman can now carry out checks on individuals and businesses which relate to the current year. This makes it more important than ever before to make sure record keeping and filing are up to scratch – and then to hold onto those records. The taxman expects to see records going back for at least six years.”
With regards to what the taxman is looking for, Mr Mannion had the following advice: “Certain areas frequently catch people out. For example, if you use assets for both business and personal use – perhaps if you are working from a spare bedroom in your home – you must keep sufficient records to back up any claims you may make for electricity and gas, for example. Similarly, if you use a car for both business and personal use you need to keep a log of mileage associated with the business and hold onto receipts for petrol and any repairs.”
Finally, with specific reference to self employed individuals, the tax advice was simple: “In general terms, the self employed must keep a record of all sales and takings, purchases and expenses. Any purchases or sales of assets such as a computer, tools or other equipment necessary for your work must also be noted, but separately from day-to-day purchases.”