Taxman Launches an attack on Farms and Small Rural Businesses

HMRC has unveiled plans to target small and medium sized businesses (SMEs) keeping inaccurate trading records. The initiative to investigate and penalise up to 50,000 SMEs a year, which would include many farms and rural businesses, could bring in up to 600m in fines for the government.

Initial plans see the HMRC examining full sets of business records including cheque stubs, till rolls, sales and takings records and bank and credit card statements among other things dating back over the last six years. The penalty imposed for records that are deemed not to be accurate or adequate would be up to 3,000. This clampdown may see SMEs being exposed to formal tax enquiries too.

Andrew Arnott, a partner of Saffery Champness Landed Estates & Rural Business Group, comments HMRCs proposals could put yet more burdens on farms, estates and small rural businesses. Any plan to investigate the financial records of SMEs is an ominous sign at a time when rural businesses are already under great pressure in a fragile economy. This is an interesting shift of focus for the taxman as, historically, fines for poor record-keeping have been very rare.

Businesses however should take note and ensure that financial records are accurate and up to date, seeking expert advice if necessary. This will ensure that you avoid penalties and fines, and will also help you to keep a better gauge of your financial well-being as you navigate through turbulent economic times.

Saffery Champness has 58 UK partners and more than 400 staff, with nine offices in the UK (including Scottish offices in Edinburgh and Inverness) and one each in Guernsey and Geneva. The firm celebrated its 150th anniversary in 2005, after the firm was founded in 1855 by Joseph John Saffery. For further information about the Company, please visit www.saffery.com

Saffery Champness has worldwide associations in over 100 countries through its membership of the global association Nexia international.

The Landed Estates Group is headed by a team of 15 partners who advise landowners, agricultural and rural businesses on financial and tax matters, particularly capital taxes and VAT.