HMRC has its sights firmly set on the two million small businesses that it believes are failing to keep adequate records.
Around 1,200 SMEs are being targeted from July in what HMRC describes as a 'test and learn' trial before launching a programme aimed at checking the records of 200,000 small businesses over the next four years.
New businesses are more likely to be targeted than established ones.
Tax officials are being armed with powers to impose fines of up to £3,000 on the worst record keepers and HMRC aims to raise an extra £600m for the Exchequer in unpaid taxes and fines.
Until now, HMRC has only reviewed the tax affairs of a business if it thinks the business could be paying too little tax. This is the first time inspectors will be looking at records for the current year.
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