Practice News - Autumn 2005

New Staff Appointment

suzanne The Partners are pleased to announce the appointment of Suzanne Langford at the Northallerton Office. Suzanne has worked in Northallerton area for many years and brings with her a wealth of experience in accounting and bookkeeping matters.

Outside of work Suzanne is heavily involved in local Community organisations.

Congratulations

Wendy Harker married David Reed in May and from now on will be known by her married name.

Our congratulations go to Wendy and David and we wish them every happiness in the future.

A Cautionary Tale

Further to the recent Newsletter regarding "circular" letters from H M Revenue and Customs (as the Inland Revenue is now known) we have also noted a marked increase in the intensity of their enquiries.

At a recent meeting with an Inland Revenue Compliance Department we learned that:-

The Treasury believe that the small business sector are underpaying tax of £8bn per year.

Tax yield targets had now been set in each Inland Revenue Compliance Department.

Investigations have proved a successful area on which to concentrate as, of every 10 taxpayers investigated, 8 resulted in increased taxation payable.

A 'whistle blowers' hotline has now been set up in each area to gain intelligence (even if it is malicious it is enough to start an inquiry).

The only way to defend a taxpayer's position in an investigation is to ensure there are good and complete records in support of the accounts prepared. In addition to the usual cashbook/computer summary it is also essential to retain the prime records such as till rolls (especially the 'z' readings), daily summaries of takings and expenses from which the records are based, appointment diaries, etc. plus all supporting invoices and receipts. Taxpayers must ensure all income including tips are recorded.

Another area that is being looked at is being looked at is private use of motor vehicles. The Inland Revenue expect a log to be kept of all business journeys. Without it it is difficult to justify business use. This is a nuisance but remember in an investigation it is the taxpayer who has to prove the figures are right not the Inland Revenue to prove them wrong.

Never before has there been a greater need for complete and accurate records.

If you would like to discuss any aspect of this article please contact us.

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