Guest blog by Sarah Orchard, Orchard Marketing Associates

I’ve been self employed since 2006 and have been completing self assessment tax returns for 10 years prior to that whilst in employment, so I guess I’m not new to business record keeping and tax return matters. But I was a little concerned when I received a very ‘official’ HMRC Records Check letter.

I didn’t doubt my record keeping, as recommended by another small business owner, I went on a very helpful local HMRC tax office workshop that explained all about self employment, who to notify, how to fill in your tax return, and what records to keep.

This HMRC website article explains what records you need to keep if you are self employed (not sure if the local tax offices still run courses!).

I find the key is to do your bookeeping and records monthly. I have a really simple Excel spreadsheet where I record on one tab the sales (all my invoices issued) with a date, sequential number, invoicee, amount, and date paid. Then on another tab I track all my allowable expenses, broken down by type and filed again by date in sequential order. I also have a tab to calculate how much tax money I should put aside which is really helpful to make sure you are saving enough to cover your payments on account and a bit extra just in case!

The Excel sheet does all the hard work adding up my sales/turnover and allowable expenses by type and it makes completing your tax return at year end, a breeze.

The HMRC Business Records Check involved an initial telephone interview lasting around 10 minutes where they asked me a few set questions on the number of cash sales, sales invoices issued each month, expenses each month and how often I did my record keeping.

They then advise you whether you need to receive a visit from HMRC.

They were happy that my record keeping was up to scratch (I should think so!) and no further action was required. See no need to worry as long as you have good record keeping. If in doubt, ask Liz at Clearways for a free consult and some help.

There is more helpful Business Records Checks information on the HMRC website.

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