HMRC’s latest PAYE error shows benefits of good bookkeeping

Good bookkeeping is essential to running a business smoothly, especially when dealing with HMRC.

In a recent (and rather embarrassing) case, HMRC claimed that Walkers’ Baggage Transfer Company had failed to account for tax due under PAYE in relation to one of its employees.

The case was brought to the First Tier Tribunal (FTT), but was dismissed after the driver in question produced a letter from HMRC confirming that the company had followed the relevant rules throughout the entire process.

The letter from HMRC – who have good form for such PAYE accounting errors – stated that the employer (Walkers’) had operated PAYE correctly and wouldn’t be required to pay back the £727.80 tax that had allegedly been due.

There was an obvious discrepancy between the taxman’s letter and the subsequent action taken by HMRC in bringing Walkers’ to a FTT tribunal. However, Walkers’ would have been wholly unable to contest this claim – which could have cost the business thousands of pounds in fines – had they not kept on top of their bookkeeping effectively.

How can I improve my business’ bookkeeping practices?

Keeping track of every letter, receipt and document relating to tax is highly beneficial, but can be an exceptionally time consuming process.

With advanced yet intuitive accountancy software, such as Xero, small business owners can stay on top of their business accounts with the minimum of effort.

All PAYE and general cash-flow documents can be quickly scanned in and automatically stored in The Cloud. This gives your accountant comprehensive, real-time access to your accounting information, enabling them to intervene immediately should any discrepancies be spotted.

If you want more accounting advice for small business owners, get in touch with the friendly 3 Wise Bears team today.