HMRC tax investigations are requesting access to your accountancy records from programs such as Sage, Xero and FreeAgent
Should you volunteer your information or not?
Let’s break down both options to see what might work best for you
What Are HMRC Asking For?
HMRC tax investigations are asking business owners who use accounting software to grant them access to all records. Accountancy software includes well-known and commonly used applications such as Xero, Sage and QuickBooks.
This type of software is created by private companies to make accountancy simpler and more accessible, allowing small businesses without formally trained accountants to perform basic accounting duties.
This means that all a business’ records are stored securely in one online space. A space you can easily invite others to view or interact with.
HMRC’s Goals: Unlimited Data Access and Tax Investigations
Their request aims to streamline tax submissions by using the internet to make document submission faster and easier.
This will also aid with tax investigations, making it much easier for HMRC to access the records of businesses they suspect of tax mistakes or intentional fraud. This is because they can view much more of your business’s financial history, going as far back as you’ve been using your software.
As a result, this leaves a long audit trail and could result in small innocent mistakes from many years ago becoming problematic, even if they were resolved privately.
The amount of information HMRC is pushing for is unprecedented and raises considerable privacy concerns. Granting anyone outside your business unlimited access to your records is, for many, an unthinkable breach of privacy.
You can’t grant access for specific files; it’s all or nothing.
To Volunteer, or Not to Volunteer? That is the Question
You have two options:
- Grant HMRC access to your accountancy software
- Refuse the access request
Remember, this is voluntary.
You do not have to give HMRC access to your accountancy software, their request isn’t enforceable. You can say no if you choose.
If you want to volunteer:
- You can do so online through your accountancy service
- If have an accountant, let them know so they can take care of it
If you don’t want to volunteer:
- You don’t need to take any specific action to opt-out
- If you have an accountant, you may want to let them know for peace of mind
- You can still satisfy HMRC’s electronic record requests by downloading the necessary files and sending them individually
The option you choose will depend on many factors, and there’s no right answer that applies to all businesses. Take your time to think it through and discuss it with your accountant to make sure your decision reflects your business needs.
If you’re concerned about leaving your digital backdoor open to HMRC’s scrutiny, let our team of experts review your accounts to get everything safe, accurate, and secure.
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