Keeping Appropriate Records – it might save your business

You may be aware of a story circulating in the press last week that suggested people should get a written receipt for all transactions.

This is perhaps easier said than done. In most cases, particularly in the corporate world, the vast majority of the day to day transactions are done by electronic means, therefore leaving a receipt of some description to be called upon should the need ever arise. However, this is not always the case and on occasion, both in corporate matters and that in a personal capacity, cash is exchanged for supplies or sales provided.

Firstly anyone paying, let’s say, a self-employed person in cash for doing a small job around your house or garden is completely legal, and furthermore, there is no legal obligation whatsoever for you as the customer, to keep a record of the payment. As a matter of fact, all UK tax obligations lie with the self-employed person you are paying, and even then a tradesman has no obligation to even offer you a receipt. However, if you are self-employed, it is vital you keep proper records, so that you make sure you are paying the correct income tax and VAT, if applicable.

Whether you are in charge of a Company or are self-employed, it is therefore vital for you to keep hold of all receipts to back up your figures for the purpose of claims sent to HM Revenue & Customs. It is worth remembering that HM Revenue & Customs can, at will, investigate how businesses keep their records.

It is important for you to keep business records to fill in the required and various tax returns in a correct manner. This will ensure that you pay the right amount of tax and at the right time, avoiding interest and penalties.

We often get called in to assist with a Company’s or individual affairs on the back of HM Revenue & Customs demanding payment or issuing threats for non-payment of liabilities, or the lack of submission of the required returns, which in some cases could be mitigated by having the appropriate paperwork to hand. We would encourage you to work closely with your current advisors to ensure you keep up to date with maintaining your records in a manner that will assist in any enquiry raised. In the event that you feel under pressure by a third party because your records are not quite up to speed, please feel free to call us and we will endeavour to work with your current advisors to find a solution to the issues at hand. Contact us.