Important Changes to Payslip Law from 01.04.2019
30th April 2019
Sterling Finance raise £1000 for People First Tameside
30th April 2019
Show all

Stop Using Personal Bank Accounts for Business

 

Yes, 31st January is gone, and tax return have been submitted on time. What a relief. But wait, from the date of your submission of tax return, a clock started ticking for 12 more months. Now from that date the tax man can decide to investigate your tax affairs within 12 months. Don’t be surprised, if you didn’t know this. This is the fact since the start of self- assessment.

Tax investigations is more painful if you do not have a separate Business Bank account.

HMRC can request taxpayer’s private records. Self-employed taxpayers are more likely to be at risk of being asked to provided copies of private bank and credit card statements, especially if their accounts have been used for business and personal. You may be thinking “are HMRC entitled to access those records?”. 

Well the answer is yes. HMRC have the law behind them. They have extensive information and inspection powers. The tax payer only has a right of appeal against HMRC notices. However, there is no right of appeal if the information forms part of the taxpayer’s statutory records. 

Information or a document forms part of the taxpayer’s ‘statutory records’ broadly because the tax legislation requires the taxpayer to keep it. Businesses are required to keep the following records.

  • records of all receipts and expenditure
  • records of all sales and purchases of goods

It is important that business transactions are not made through personal and private accounts.

Let’s be reasonable

Even if private records do not form part of the taxpayer’s statutory records, there is still a requirement to provide information or produce a document that is ‘reasonably required’ to check the taxpayer’s tax position. It is important that business transactions are not made through persona and private accounts to avoid agreements.

Don’t get personal

There are certain restrictions on what HMRC are required to inspect. These include personal records such as, Individuals mental, physical, spiritual and personal welfare.

To find out more about HMRC enquiries for private records please contact us at Sterling Finance on 0161 339 4989  or email info@sterlingfinance.net.