Partner Rebecca Benneyworth Training Consultants
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How big a problem is record keeping?

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3rd Mar 2011
Partner Rebecca Benneyworth Training Consultants
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Rebecca Benneyworth considers the evidence gathered during HMRC’s pilot record checks in 2006-7 and considers what its new approach will mean for advisers and their clients in 2011.

During the development of HMRC’s new powers, and when the tax authority was ready to start bringing forward legislation, it set out the its objectives for compliance checks on taxpayers including businesses.
“It is envisaged that an officer of HMRC might begin a compliance check in respect of any of the relevant taxes for one or more of a number of purposes. These include checking that:

  • a tax return, amendment to a return or claim is correct
  • statutory record keeping requirements are being met
  • tax has not been underpaid or over-claimed
  • any issues concerning possible tax avoidance are considered.”

The second of these objectives is now generating some publicity and HMRC is expected to target smaller businesses to check the quality of their records during 2011. Although the stated intention of the record keeping checks is to ensure that smaller firms are keeping adequate records, there are potentially more serious issues at stake than a “slapped wrist” for poor records.

The issue for businesses is a complex one, but the key points to bring out in regard to poor records keeping are:

  • If the records are shown to be poor then the officer has in effect shown that the figures on the tax return cannot be relied upon and the officer could then look make assessments for under declared profits.
  • Basic integrity of records is clearly identified in the guidance as an element of “taking reasonable care”. So a taxpayer with very poor records faces not only a discovery assessment – for a period of 6 years due to the failure to take reasonable care (the period would otherwise be 4 years) but also potentially penalties of up to 30% of the tax to which he is assessed based on that failure. The opportunity to make an unprompted disclosure is lost, because the integrity of the records is only disputed when a compliance check is under way
  • However limited the business owners’ abilities it is up to them (by law) to keep sufficient records so that any tax return prepared from them is correct and complete.

There is not presently any evidence that HMRC is planning a “big stick” approach to smaller businesses, but the consultation process that concluded on 28 February made it clear that there will be a focus SME record keeping in 2011.

There is also some history for HMRC of looking at business records (in the relatively recent past) and being dismayed with what was observed!

“Interventions”
The 2006 Budget included details of HMRC’s plans to use new approaches to compliance. Business and the accountancy profession were consulted to see how this might work. Although this all occurred five years ago, the work done then will have a bearing on what happens in 2011.

Almost as soon as the consultation closed, HMRC announced a trial of the new methods that started on 10 July 2006. The accountancy profession’s view was that the trial was set under way far too quickly, and many advisers had doubts about participating in the trial.

HMRC’s 2006 approach included a review of business records as they were kept (rather than after the end of the tax year as would be more normal). Under the real time record review current business records and record-keeping procedures were examined to make sure they met the standards that HMRC considered appropriate to record the results and make returns accurately. The checks focussed on cash transactions and covered both direct and indirect taxes.

Evaluating the results
Although the 2006 pilot scheme was much criticised, a number of key lessons were highlighted in the evaluation report (467kb PDF) produced in April 2007. These are likely to shape compliance developments over the next few years, and indeed are likely to form the basis of the entire structure of compliance effort in the medium term.

The document’s executive summary stated that while more streamlined compliance processes were welcomed by both taxpayers and advisers, more collaborative work was needed to produce a workable system. This led to a joint working party which has produced some very useful work.

In the shadow of this overall conclusion there is a risk that some of the more specific issues arising have not had sufficient attention from the profession. The pilot scheme review included the following comment, which highlighted the specific issue of record keeping: “Some taxpayers are not able to declare the correct amount of tax because their business records are not adequate. If this is left unaddressed it could subsequently lead to more significant errors.”

HMRC identified the poor records they observed in the trial as a key risk to the integrity of the tax system. It would be naïve to expect that this conclusion would not form a major part of the compliance drive in the future.

Detailed analysis – record keeping
It is likely that the format of the real time records review work will be repeated when HMRC starts focussing on record keeping in 2011. Here is how the work was described in 2006: “Real Time Records Review checks business records before the relevant tax return is submitted. It provides an opportunity for HMRC to discuss record keeping with the taxpayer and examine the completeness and adequacy of records in order to form a view on the taxpayer’s ability to make accurate tax declarations. Any errors found during the examination are corrected and the taxpayer given guidance to help prevent future errors occurring. “

The visiting officer would consider the specific risks identified for the Real Time Record Review and:

  • ask questions to establish what systems were in place to ensure the taxpayer could complete their returns accurately
  • examine a selection of records to confirm that the systems and controls operate in the manner described by the taxpayer
  • reach a conclusion about whether the systems in place gave reasonable assurance that the returns will be accurate and complete; and
  • discuss those conclusions with the taxpayer.

Following the visit, where no errors were identified which required an assessment, based on their opinion of the adequacy of the records, the officer recorded their view on the adequacy of the records as either:

  1. The Real Time Records Review demonstrates that, from the records reviewed and information given, the taxpayer is keeping adequate books and records to give reasonable assurance that returns will be accurate and complete.
  2.  The Real Time Records Review demonstrates that, from the records reviewed and information given, the records kept may not be wholly adequate to ensure that returns will be accurate and complete.
  3. There is strong evidence that books and records retained are inadequate and would be incapable of ensuring that returns will be accurate and complete; or
  4. Books and records are not maintained.

This entire approach is very similar to the old fashioned “systems audit” of the 1970s and 80s – and indeed is intending to achieve similar outcomes by ensuring records are adequate to produce reliable figures for the tax return.

When carrying out the review in 2006, HMRC found the refusal rate very high – only a third of those businesses approached agreed to take part.

The results of the tests were also quite poor, with 36% of businesses having inadequate records to prepare a tax return from.  HMRC concluded this was predictable and fitted its assumption that those who thought their records were good were more likely to agree to the voluntary intervention well founded. In short, HMRC saw the “best of the bunch” and their records were quite poor – so the rest must be worse on the whole.

The test review concluded: “Even though the pilot was voluntary, the level of record keeping among those willing participants demonstrated a sizeable potential problem around the adequacy of records kept. It is reasonable to assume that the position would be no better, and could be worse for those who are unwilling to engage with HMRC voluntarily. Earlier identification of such problems could limit errors and problems in the future.”

So the lessons are there, and it should now be no surprise to advisers that HMRC is focussing on records in the small business sector.

However, our own work in rectifying the problems with records is being excluded here as if the records are examined “live” this cannot take account of what we do. The message for us all is to ensure that our clients’ systems are designed to create the best possible evidence for the accounts and return, even if there are inaccuracies which we resolve later.

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Replies (34)

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By Mikeparr
05th Mar 2011 00:35

s9A

 I reckon they have already started.S9a enquiry letter issued 28 February 2011. Part time Mobile Hairdresser

Turnover £12K. Fortunately the client keeps records but are they adequate for HMRC enquiry

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By Nick Graves
07th Mar 2011 11:46

Sounds like a classic easy beat-up

Prove you DON'T work 96 hours per week & much of the turnover is cash. I say you do & the grown-ups will believe my side...

Capitulate of face a bigger accountancy fee than your tax bill! And I don't like the way you cross your sevens so I win.

The failure rate of HMRC taking on opponents its own size must make it henceforth pick its fights more carefully...

 

 

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By johnjenkins
07th Mar 2011 12:25

New Investigations

I've got one at the moment. Ltd Co.Turnover under £1m, husband and wife team. All under investigation. All records and computer printouts etc. for the year in question, 6 months prior and 6 months after year end - for Debtors and creditors purposes. Emphasis on how records kept, when posted etc etc.

I have assumed that this is a new syle compliance investigation and will include PAYE and VAT. It will be interesting to see how the investigative officer is trained up.

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By Bob Harper
07th Mar 2011 12:28

I have an idea

@Rebecca - how about accountants source some really simple bookkeeping software and provide it for free as part of their service.

This strategy would be in the best interests of clients. It would protect their clients from the dangers of a tax enquiry and enable accountants to offer real-time support. This could include interim budgets and year-end tax planning on areas often missed like Tax Credits.

This new approach would build goodwill, trigger referrals and would reduce year-end time by up to 75% so the accountant will win as well.

Having worked with over 200 firms what I can tell you is that firms need to commit. They need to do this strategically and up resources upfront.

Bob Harper

Portfolio| Marketing for Accountants
 

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By John R
07th Mar 2011 12:52

Records and accountants' work

We have a couple of farmer clients who present their "records" to us quarterly. The records consist of cheque stubs, lpaying-in book counterfoils, remittance advices, purchase/expense invoices and bank statements. The purchase/expense invoices are marked by the client with the date paid and whether by cash, cheque or debit card. The clients say that all cash income is entered on the paying-in book counterfoil as received and this is banked intact and all business cash expenditure (small) comes out of cash drawn from the bank to cover this and drawings. They also keep a periodic mileage log (three months sample every couple of years or so).

We then write up a cash book, balance the bank and assist in preparing the VAT returns each quarter.

We obviously use the cash book and VAT workings to prepare the annual accounts. In this connection, we also have details of unpaid invoices at the year-end (which we usually identify when doing the next VAT return) and a contemporaneous year-end stock list.

Do you consider that these clients are maintaining adequate records? Presumably, in the event of a Real Time Records Review we would have to produce the records located at our premises.

 

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By chatman
07th Mar 2011 14:06

Free Bookkeeping Software

For excellent quality, easy to use, free bookkeeping software, I recommend VT Cashbook. You can provide it free to clients without having to pay for it yourself, which gives it an advantage over More, to which Bob's post links. 

VT Cashbook files can be used as a stand-alone package or the files can be imported into VT Transaction for the acountant to work on.

I have tried More (to which Bob's post, above, links) and it caused me huge problems. Not only that but initially I was told to offer it for free, then I was told I should be charging £5/month. 

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By Simon Sweetman
07th Mar 2011 14:41

for John R

What you describe seems fine by me for most farmers, many of whom do not have any cash income at all. If they were running a regular market stall or farm shop I think you might look for something more, but where there is no cash record keeping can be quite simple and still adequate. 

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By fionamcke
07th Mar 2011 15:23

Heavy Burden

Everyone seems very sanguine about all this but isn't it potentially a heavy burden upon (already) struggling small businesses? How will many small businesses have the expertise to know whether their record keeping is adequate? Or HMRC for that matter?

The government  is hinting about increasing the audit threshold but I'd suggest that these new inspection rules are more onerous. Unless a business makes sure it pays for a pre-audit it's likely to be paying assessments made because of honest oversights or errors. HMRC would be identifying errors leading to understatements of tax and not those (and they happen) that overstate tax.

I believe it makes business sense to keep proper real time accounting records and it has always been the case that in the case of enquiry the individual had to prove innocence. These rules may put more money into the pockets of us accountants but I think it yet another greater burden for small businesses. The skilled tax evader will in any case still be able to present pristine records or remain totally under HMRC radar.

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By michael1958
07th Mar 2011 15:27

Proper books???

I have recently been approached by two concerns. Both fast food so always cash. HMRC do not believe the till readings and have done a gross up exercise gone back five years and say one client is short £444,000 in sales. We now must prove them wrong. The maths behind there exercise is very flawed. There intention was to scare the client into admitting anything and get something. Its has taken them 15 months to get this far but if they don't believe the till readings then a gross up will need to prove the figures. They keep moving the goal posts and right now I don't even know what pitch I am on let alone the game I am playing. As far as I know my clients are playing straight but HMRC say that they are falsifiying records. I will be lucky to get a draw.

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By Bob Harper
07th Mar 2011 15:33

Huge problems

@chatman - trying MORE and doing MORE are two different things. Some firms have had problems some firms have had huge benefits. 

The software is the same but I have not heard about "huge" problems before, only firms being unhappy to pay for something they have failed to get clients using. I can understand that. What specifically was your issue?

The message is simple, free software but firms can increase their baseline fee because the new service includes extra support around bookkeeping. Some firms suggested to clients £5 a month for this element.

Bob Harper

Portfolio Marketing
 

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By fionamcke
07th Mar 2011 16:25

Proper books

And could it be possible their employees are putting cash in their own pockets?

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By chatman
07th Mar 2011 16:50

"Trying MORE and doing MORE are different things"

I think my first mistake was working with someone who seems to speak a different language to me.

MORE had some sort of attempt at version control whereby after the accountant worked on the file it was sent back to the client, and MORE imported the latest version worked on by the accountant. Unfortunately there was no control to make sure the client imported it to the correct folder. I experienced times when the client imported it to the folder that came up as default (eg /downloads) and then went on happily inputting to the old file. this went unnoticed until I got the file back at the end of the next VAT quarter.

It gave me terrible problems with VAT returns too.

My complaint about the pricing, Bob, was that you personally told me to offer it free, and then you personally told me I should have been charging the clients £5/month for the service.

I also found MORE to be very clunky and user unfriendly. The help line was very responsive and friendly but I did not like the product.

Anyway, VT Cashbook is free from the supplier, so in the context of this discussion, why would anyone pay for MORE?

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By miketombs
07th Mar 2011 17:15

Isn't this drifting a long way off topic?

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By pawncob
07th Mar 2011 17:40

HMRC and Book Keeping

Continue the debate here:

 

https://www.accountingweb.co.uk/anyanswers/hmrc-book-keeping/482048

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By Bob Harper
07th Mar 2011 17:57

Plain English

@Chatman - I do not know what you mean by different langauage? I have a reputation for being straight to the point.

Version control - MORE issues live updates like Windows so everyone is on the same version. This means data can go back and forth between accountant and client easy. There are two ways clients can send data; one is a back-up for the accountant to look after the data. The other locks the file so the accountant can do their thing and then return it to the client and prevents overwritting data.

Data files are given a name which includes the date. There are basic IT questions the accountant should ask as part of the delivery. One is to ensure clients are capable of handling email attachments. Clients who are not 100% because they are not 100% computer literate can require a bit of support. The idea is the accountant shows them what to do, this generates goodwill and referrals. We also recommend every firm get online meeting software so accountants didn’t need to visit the client.

Did you do this?

Pricing - the licence agreement makes it clear that the software must be free to the end-user. But, you should have charged as much as you can for your new packaged service - £5 a month for software support is just ONE option you could have added. You could have also added in interim tax reviews/estimates; MORE is about more than just adding the software to the software.

Product - the software is not designed for accountants, many accountants do not like it but clients seem to love it (provided the software is implemented correctly). I am not surprised you like VT because it is more accountancy and by all accounts the accounts production is a great product.

VT Cashbook is free, so is Excel. There are many reasons why someone would pay for MORE software, here are some:

MORE has ledgers VT Cashbook does notMORE ties clients to the accountancy firmMORE gives accountants a USPMORE control clients

MORE works if the accountant does when it doesn't the accountant tends to blame the product.

Bob Harper

Portfolio Marketing

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By thomas34
07th Mar 2011 18:03

Poor Records

"If the records are shown to be poor then the officer has in effect shown that the figures on the tax return cannot be relied upon and the officer could then look make assessments for under declared profits".

"However , our own work in rectifying the problems with records is being excluded here as if the records are examined "live" this cannot take account of what we do".

Until the tax return is submitted there cannot be any measurement of underdeclared profit arising from poor records. In practice a lot of the accountant's working papers will form part of the records. Records in my language consist of prime/source documents (sales invoices, purchase invoices, bank statements, cheque stubs and itemised paying-in books), all of which should be produced as contemporaneously as possible with the transaction, and the books of account which will either be on a single entry or double entry basis.

If record keeping is of a consistent quality year on year and no shortcomings can be found in the last return submitted, I would conclude that the records were adequate.

Whether HMRC would come to the same conclusion is another matter but I look forward to the battle ahead.

I have a client who has sequentially numbered sales invoices which he only prints off when I request them and does not keep a sales day book (an old term for the benefit of younger accountants). My first task is to prepare a list of these invoices so that I can match them to his bankings. My working paper therefore forms part of his records.

This annual reconciliation poses no danger to the validity or accuracy of his tax return and I would not describe his record keeping as poor since I have laid down minimum standards over many years for what I require from him.

 

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By chatman
07th Mar 2011 20:14

"MORE works if the accountant does when it doesn't the accountan

What a cheap, and intellectually weak excuse for the shortcomings of your product. Or any product for that matter. You might as well say "you're just jealous because I am prettier than you", for all the logic behind it.  I could just as easily say that I find that when the product doesn't work, the marketeer tends to blame the client (in fact, I suspect this to be the case here, but, having insufficient evidence, would not be shameless enough to claim it as fact). If you really believe what you say to be true, provide some evidence for it.

I am not saying MORE is useless. I am simply saying there are many other products on the market which I would choose first. I managed to get round all the problems I suffered with MORE, but why should I continue to do so, when there are other products that don't cause me these problems.

Even if all my problems with MORE were of my own making, there are other products out there which even a fool like me is capable of using. They are the products I would go for any time.

Incidentally, my clients didn't particularly like MORE. I don't know why you think they do.

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By Bob Harper
07th Mar 2011 21:08

The truth

@chatman - I did not accuse you of being a fool, you were smart enough to licence MORE but that doesn’t mean you were effective implementing it. I am just being brutally honest.

If your clients didn’t like MORE it is because they were wrong for it or it was delivered poorly, perhaps both. Both are 100% down to you. Is this a bit harsh? Yes, and I do not want to be personal but that is the reality of the MORE model.  MORE is what it is and it isn’t what it is not. 

I am not saying MORE is perfect, it isn’t and I know there are other bookkeeping packages that are easier to implement. But, that is not the MORE value proposition; a spreadsheet is easy to implement.

You want proof of success phone me and we can have a chat. I'd like to know exactly what you did it terms of numbers of deliveries and how you worked with us. And, if you want I’ll give you a few firms to call who have 100 plus users and growing. I’ll also give you some numbers of firms who failed who like you blame the product.

Bob Harper

Portfolio Marketing
 

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By chatman
07th Mar 2011 21:53

@Bob

Again, you make a load of ludicrous allegations with not even an attempt at justification.

Before I ask you for numbers of accountants who couldn't make more work due to their own faults, what authority do your figures have?  Why should I believe them? 

You say the people who dumped MORE failed; I could very well say they succeeded in dumping a sub-standard product without wasting more time and money. I have no less evidence than you to support my argument. My point is that there is no point continuing to make baseless claims unless you have the arguments and evidence to back them up.

From my own point of view, I consider my decision to use MORE a massive failure, and my decision to finally dump it for software that my clients and I found easy to use a very belated success.

In addition, you have missed my major point: there are a lot of products that even fools like me can use. Why should we use MORE whe we can use them?

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
07th Mar 2011 22:34

What we need to do

As the experts with books and records and all things numbers, I don't think it is fruitful to argue about exactly what package etc will work. What we need to do is help our clients by moving them along the road towards better records by being smart about what we suggest for the smallest businesses.

I swear by (as I know do others) an A5 diary and a duplicate book. Of course not suitable for all businesses, but for many teeny tiny service businesses this will cover most things. Write appointments in diary. Write down how much charged and how paid. Enter expenses  & mileage in diary and keep receipts in a used A4 envelope for each month. Bank everything intact and draw cash if you must. Separate bank account and business only credit card if needed. Job done. If they are not VAT registered this should cover most.

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By Bob Harper
07th Mar 2011 22:40

Fit

@chatman - my figures and comments are based on working with over 200 firms. I do not know who you are so my comments are general.

You are free to believe what you want and you have my telephone number so we can assess your experience. And, you can speak to firms who have done really well.

With some firms I recommend they move on, in hindsight they should never have signed up in the first place. It is now much harder to licence the software from us!

For me, your decision to use MORE was not a failure because you tried something new. For you it helped you find what works and if you have great success with that then well done.

I do not know what you have achieved in terms of user numbers, quality of bookkeeping, referrals, added value to clients and critically recovery rates - firms are doing well hit and exceed an effective rate of £125 an hour.

But, you and others should not consider MORE unless they want something unique and are prepared to work hard to make it work.

I think the point you missed (like most firms who didn’t get on with MORE) is that you fit clients to the software, not the other way around. 

Bob Harper

Portfolio Marketing

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By Bob Harper
07th Mar 2011 23:18

What works is right

@Rebbecca - with the clients you refer to your system works so maybe I would not recommend any software.

But, do you think the accountant can provide high levels of service, pre year-end of tax planning, mortgage references, tax credits, interim payment reviews with this level of records as well as doing the compliance and generate £125 an hour?

Bob Harper

Portfolio marketing
 

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By Eddystone
07th Mar 2011 23:34

Well said, Rebecca !  Most clients mercifully don't use computerised accounts anyway; many of those that do are a nightmare like the accounts I'm doing at present - the 'bank a/c' has cash & card items all jumbled in as well, many bank payments omitted altogether and the closing balance per the b/statement is £410k - the computer shows £15k!!  So best ignored and revert to the old cheques analysis & bank rec. !

I'd say that 'adequate records' doesn't have to mean a double entry set of accounts on a day to day basis, but the basic stuff that Rebecaa suggests so that we accountants can prepare accurate accounts.

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By Bob Harper
08th Mar 2011 07:46

Change of mindset

@Eddystone - why didn’t you spot this issue earlier?

When a client is first taken on why don’t you assess their bookkeeping? This can throw up all sorts of opportunities for you. Why not make it a condition that clients contact you if they want to change their bookkeeping system?Be proactive and you will never be in this situation.

I would now be sending the data back or quoting a fee for sorting it out which would be seperate to the accounts/tax fee.

By the way, the situation you outlined is exactly why I created MORE. I agree, most clients do not need a double entry system. MORE doesn’t produce a balance sheet and you will not see accruals, prepayments and journals in the system.

I could be wrong but I suspect the client you mention has a maximum they will pay you. And, by the time you have sorted out the mess you will end up with a compromised recovery rate. After a number of years in practice I made the decision this was not acceptable.

My business model was underpinned by my personal goals and I didn’t want to generate less than £125 an hour. I was not interested in big fees; I wanted lots of small fees so that I did not need to get involved in operations.

Ignore the software for the moment; the idea with the MORE strategy is to literally force clients to use software. But, to fully support them and MORE software would be one of the choices to offer clients. You need more than one system unless you discover a niche.

If, after trying everything a client cannot, will not or does not use software properly then I recommend firms withdraw their service. This is because the work is likely to be unprofitable, not enjoyable and risky. Not just in an enquiry but the firm cannot provide best advice and leaves themselves open to a negligence claim. MORE is a strategy, you can use a pen and paper as the system but a key part of a strategy is saying no.

What is needed is a change of mindset, accountants need to develop services around bookkeeping. This will include helping clients implement technology. There is a massive opportunity because the majority of accountants effectively wash their hands.

Bob Harper

Portfolio Marketing

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By thomas34
08th Mar 2011 08:10

More Blatant Advertising

24 posts including 7 from one supplier of book-keeping software.

I know I don't have to read this crap Becky but the discussion about Schedule 36 is being hijacked and Rebecca's article devalued very quickly.

 

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By Bob Harper
08th Mar 2011 08:35

Not just software

@Thomas34 - MORE is a strategy designed to deal with the issue, not just a software package.

I may be biased but I feel I have value to add to the discussion. I have probably more experience than anyone with this issue and as far as I am aware, MORE is the ONLY system in the world designed for the sole objective getting perfect data from clients. Infact, bookkeeping and client functionality comes second.

I could be wrong but also I think I am allowed to have a discussion here with someone who tried the software says it caused huge problems. I have said before that I am happy to respond privately if I am contacted in private and even suggested the person call me.

By the way, not only do you not need to read you also do not need to post. 

Bob Harper

Portfolio Marketing

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By thomas34
08th Mar 2011 10:02

8

QED.

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By Huw Williams
08th Mar 2011 10:14

If only

Picking up on Rebeccas comment about records for smaller businesses.  I wonder whether

a  the client will actually do what you suggest (as it is so easy to forget or lose the petrol receipt in the back of the van).  Even with these records, I would expect there to be some accounting adjustments at the year end (for the month when there were no receipts for example..)

b  HMRC will agree that this level of record-keeping is sufficient

 

 

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By ShirleyM
08th Mar 2011 11:22

HMRC Guides

I have read the HMRC guides and they do not seem too onerous in their requirements. They seem to consider 'completeness' more important than the method used for recording transactions.

Their examples say that raising sales invoices, and putting ALL receipts for expenditure in a box is acceptable for small business. They do point out that anyone who keeps bookkeeping records, but omits some sales and purchase items from the records, is not reaching an acceptable standard.

We try to 'educate' our clients about keeping adequate records, retaining receipts, etc., but it can be hard work with some clients. At the end of the day we use high fees to discourage sloppy record keeping and low fees to encourage good record keeping.

I am not keen on the idea of 'in year' HMRC inspections, but I do welcome the fact that HMRC are doing something about poor record keeping, just so long as they don't go overboard!

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By pawncob
08th Mar 2011 12:05

HMRC B/K

I hate to disparage HMRC's staff, but after 40 years of dealing with investigations by them, I have yet to find an IofT who has any real knowledge of book keeping principles. I have had arguments with them over almost every topic from Stock and WIP to the correct B/K treatment of Directors' Loans, where they have exhibited no understanding of what should be done or how adjustments this year will affect the subsequent accounts. The thought of HMRC issuing guidelines on the records to be kept fills me with apprehension.

https://www.accountingweb.co.uk/anyanswers/hmrc-book-keeping/482048

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By johnjenkins
08th Mar 2011 15:58

HMRC and Bookkeeping

HMRC aren't really bothered about the standard of bookkeeping. Barring mega gaffs what they look for is if the Income and expenses reflect the living standards of the tax payer. This has not changed since I started in the mid 60's. What is going to change though is there will be very little scope for error without the dreaded penalty. How many tax payers will just say "negotiate and get it as low as possible" rather than fight for their rights.

One thing about investigations that has always intrigued me is that HMRC and before say they check the return to make sure it is correct, yet they only bother about missing income!!!!!!!!!!!!!!!!!!!!!

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By Trevor Scott
09th Mar 2011 17:32

This records mullarchy is just a vehicle ....

... to do some in-depth checks and pose loaded questions directly to the "mug/customer/taxpayer", without an agent present, without ordinarily having to justifying their actions....or be accountable.

Any supposed departures from HMRC "standards" will, of course, have to be followed up by an enquiry officer who will already have the justification to pile on more pressure for a result. 

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By Ann Lovatt
11th Apr 2011 15:37

Hooray for Rebecca!

-- Snowy Owl

Us girls can stick together for common sense sake!

Most of my clients are recommended a diary and/ or kids excerse book for "In & Out" records. It works because clients feel able to scribble in them as & when the transaction happens, they are more than happy to complete something simple that works & they can keep in the van. A lot of clients do not have the ICT skills we may have, I even have a new 23 year old client (a farrier) who "doesn't do computers" & was delighted with a diary based record, so not just an age thing!

As for the other two I have never seen such unprofessional posts! I've never heard of More, but certainly wouldn't touch it now!!

 

 

 

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By Ann Lovatt
11th Apr 2011 15:44

A Farrier?

PS for those of you not as lucky as me to live in beautiful north wales and have a rural client basis, a farrier is the bloke that shoes horses!

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