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Newsletter issue - March 2010.
The Taxman is very keen for all businesses and individuals who need to submit a tax return, to keep complete and accurate records. He has recently issued a new leaflet that summarises all the records different types of businesses should keep, and those they are required to keep by law. See: http://www.hmrc.gov.uk/factsheet/record-keeping.pdf
If you do not keep complete and accurate records of all your income, sales, gains, expenses, and business costs, you will not be able to prove the figures reported on your tax return are correct. If the Taxman challenges the entries on your tax return, and you cannot produce the evidence to back up those figures, he will assume they are incorrect. The Taxman will then think up a more reasonable figure (in his eyes), and look to tax you on that. You may then have to pay the additional tax, interest for late paid tax, and a penalty of up to 100% of the underpaid tax.
You can avoid such a nightmare if you keep accurate and complete records. Talk to us if you are uncertain about what paper and electronic records you should keep.
