by Steve Sims
12:45 PM, 14th April 2011, About 10 years ago
Guest Blog provided by Steve Sims, author of ‘Understanding And Paying Less Property Tax For Dummies’. Steve and his wife Amanda also have a boutique accountancy business which specialises in providing taxation advice and accountancy services for property investors.
A surprise pilot to test the taxman’s forthcoming business record checking scheme has triggered angry responses from property businesses and tax advisers.
Up to 2,000 businesses, including property developers, buy to let landlords and letting agents, can expect the taxman to drop in to inspect their business records over the next few weeks.
Consultation documents from HM Revenue and Customs hinted some preliminary checks might be undertaken before the official scheme start on July 1, but no one expected them to start so soon.
HMRC has revealed around 30 inspectors in Sheffield, Liverpool, Newcastle and Scotland are actively visiting businesses now.
“We do not expect to charge any penalties unless there is evidence of deliberate loss or destruction or complete absence of business records,” said an HMRC spokesman.
The business records checks are part of a wider government £900 million clampdown on tax cheats.
According to HMRC, 50,000 businesses can expect a visit every year – and if they do not keep records in line with HMRC advice, they could face penalties of up to £3,000.
The scheme represents a new approach for curbing tax avoidance, as in the past, HMRC could only check up on taxpayers who submitted returns. With the new scheme, HMRC can now visit suspected tax avoiders to see if they should be submitting a tax return.
A new power also lets tax inspectors call unannounced on the homes of the self-employed to spot check records.
The Chartered Institute of Taxation (CIOT) has led protests against HMRC making an early start of checking businesses, and as a result, the taxman has agreed to limit the inspections.
Anthony Thomas, CIOT Deputy President, said: “HMRC’s reassurance that this is a ‘test and learn’ pilot where no penalties will be levelled, other than in exceptional circumstances, is welcome.
“They should have made this clear to tax advisers, business organisations and, above all, those taxpayers – represented and unrepresented – they are targeting, from the outset.
“By not doing this HMRC gave the strong impression that they were proceeding with this project prematurely.”
Click Here for the HMRC guidelines for keeping good business records
A link to Steve’s web-site can be found HERE.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.
Previous ArticleStubborn sellers let luxury homes rather than drop prices
Next ArticleBrokers split on buy to let mortgage lending