Q. Have there been any changes regarding business record checks?
A. The Taxman believes that a lot of businesses do not pay the right amount of tax because they don't accurately record their business income and expenditure. In other words their business records are not of a high enough standard to produce accurate accounts. We agree that many businesses do not keep perfect records but we work with business owners to help them retain the necessary documents, and use those records alongside a good understanding of the business, to produce a reasonable statement of profit or loss for the tax return.
Unfortunately the Taxman is not taking such a helpful approach. He is now sending out 120 tax officers to examine the un-sorted raw records held at thousands of businesses. If the tax officer (who is not a trained accountant), judges the business records to be inadequate the business owner could receive a penalty of up to £3,000.
Some businesses have been visited already as part of a training exercise for the tax officers. Following those 'test and learn' visits the tax officer may have made recommendations, but he won't have raised a penalty, unless there were absolutely no business records to examine.
Now the learning stage is over and the gloves are off. We expect penalties to be imposed on many businesses by these lightly-trained tax officers. If a tax officer asks to examine your business records, please contact us immediately. Potential penalties can be avoided if we are able to explain to the tax officer exactly how your basic business records are turned into an accurate profit/loss statement.
Q. I've received a tax refund for 2010/11, but I'm worried that it's not correct as I usually have tax to pay each year. Also I haven't even submitted my 2010/11 tax return yet.
A. You are right to be worried about the tax refund, as the Taxman's computer has issued some incorrect refunds recently. If you normally complete a self-assessment tax return but also have some income taxed under PAYE, the computer should wait until your tax return has been submitted before calculating the tax to be refunded.
In a few cases this has not happened, and the tax refund has been based only on the taxpayer's PAYE income. Please ask us to check the tax calculation that should have arrived with your refund cheque.
For details regarding self assessment tax returns visit
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