Why you need good accounting records to satisfy HMRC

When running your own business, it’s vital that you keep a record of all of your outgoing and incoming payments. As a new business owner you may not know that it is essential you keep a record of your  accounts and the implications you may face if you don’t keep a record. Below we outline the main reasons why this is necessary for your business.

Why you need good accounting records to satisfy HMRC

Legally you have to keep records for your
business and for any other income you get.
This is so you can fill in your tax return and
show that the figures are right. You’ll need
to keep at least:
• invoices for sales and purchases
• receipts for business expenses
• bank records.
Good records will also save you time and
help you run your business more efficiently.
This information leaflet focusses on the
accounting records you need to keep to
satisfy the tax authorities.

HMRC checks on returns

If Her Majesty’s Revenue and Customs
(HMRC) has reason to suspect that a self
assessment, corporation tax return or
VAT return is incorrect, it will carry out a
compliance check. Usually, something will
trigger a check. For example, when figures
entered on a return appear to be wrong.
Or when a small business suddenly makes
a very large claim for VAT, or one with a
large turnover declares a very small amount
of tax. The only way HMRC can find out
whether the return is correct is by carrying
out a check.