Taxing times

It is absolutely crucial that any business, however small, keeps good records for tax purposes. The consequences of failing to keep records can be significant.

- Adam Bernstein

The modern world is incredibly complex and is getting more so as technology takes over portions of our lives. But just as technology has opened up new opportunities, so it’s made it easier for HMRC to get a handle on how taxpayers are managing their affairs. The tax body frequently finds errors and Adam Bernstein spoke to Helen Thornley, a technical officer at the ATT, for her view on where mistakes are frequently being made and what taxpayers need to do to stay out of harm’s way.

Keeping records

In a recent tribunal case, Sean Convery, a haulier and vehicle repairer, failed to keep records of business sales for a number of years. HMRC raised an assessment of the lost VAT amounting to over £46,000 based on only two invoices which was the only information available to it in the period. When the taxpayer challenged this assessment, the tribunal upheld the assessment as the judge considered that HMRC had made a reasonable estimate on the limited evidence available.

For Helen Thornley, records are everything and she advises the self-employed to “keep records separately from personal records in the event of an enquiry.” The same applies to companies which, as Helen explains, “should have their own bank account and records as they are a separate legal entity to shareholders and directors.”