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Limited company contractors should keep on top of their accounting obligations
Posted Jul 15, 2011
A report by a firm of online contractor accountants suggests almost half of the UK's small business owners lack even the most basic accountancy skills, and are therefore at risk from HMRC scrutiny.
As part of a nationwide report into accountancy malpractice, Crunch Accounting polled 500 business owners from around the country to gather information on how company directors dealt with their accounting obligations.
According to the survey, around one third keep 'lousy' books, and almost 30% are 'clueless' when it comes to tax issues, VAT and which PAYE forms to fill in.
An impressive 17% even admitted to filing incomplete or incorrect documents to HMRC in the past. A further 23% said they would consider doing so in the future if the need arose.
Only 22% of business owners said that they were able to look after the own accounts to the required standard, 37% said their accounting records were in a poor state, and 41% were in need of a complete overhaul by a qualified accountant.
How to trigger an HMRC investigation
Unsurprisingly, Crunch has warned limited company directors to take their obligations seriously.
A spokesman from the firm commented:
"Britain's entrepreneurs should be congratulated for taking such a bold step and starting out on their own."
"Yet, as these figures show, many are running a very serious risk of being hung, drawn and quartered by HMRC for failing to submit correct returns."
Who's responsible for your accounts?
Even if you have an accountant, limited company contractors should remember that it is the directors of limited companies who are ultimately responsible to ensure that they meet their accountancy deadlines and submit accurate information, not their accountants.
You can read more in our guide to the duties and obligations of limited company directors here.
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