Times are difficult for the SME. Below are three examples of HMRC making it unnecessarily so.

Expense Checks

There are reports of tax inspectors asking to see personal diaries to verify directors expenses. This is clearly going well beyond a normal business check and such demands should be resisted. Keeping proper records of expenses and making contemporary claims supported by documentation and vouchers should be more than sufficient for HMRC purposes. Anything more can be intrusive and expensive for the taxpayer.

Business Records Checks

It is alleged that HMRC officers, undertaking Business Records Checks have “little practical accounting experience”. Fines should only be levied where there have been clear and obvious failings. Warnings and advice should be given in other cases. If those making such decisions have little practical experience there can be nothing but unnecessary and costly discussions. The profession and the taxpayer need to be vigilant.

Time to pay

We have noticed a reluctance from HMRC to grant time to pay agreements especially if requests have been granted previously. Time to pay agreements allow businesses to agree with HMRC a payment schedule to pay certain taxes without fear of punitive action by HMRC. The number of companies being allowed to defer tax payments has fallen by almost 60% since 2009. We have noted HMRC prefer to talk directly to the client when negotiating time to pay arrangements which can leave the client unrepresented. Recently a colleague set up a telephone call with the client HMRC and ourselves and in what were challenging circumstances secured a time to pay agreement.