It’s just not cricket
In the news last week an Australian cricketer punched an English cricketer in the face. Whilst it is good to know that our young cricketers must be super fit to be able to be drinking at 2am in the morning then play international sport the next day one can’t help thinking that with a stronger culture of discipline this would not have occurred in the first instance.
A parallel can be drawn with HMRC compliance checks. Whilst HMRC are not allowed to punch a tax payer in the face HMRC does have certain powers to demand information, inspect business premises, assets and records. It is therefore important that the taxpayer knows the HMRC’s information and inspection powers, and restrictions thereon, but more importantly implements a culture of internal control in the business to comply with obligations under the Taxes Acts.
A small sized business develops over time and control is generally achieved through the owners also managing the business on a day to day basis. As the business grows, perhaps to a medium sized business, then more formal control activities should be implemented.
At the very least an SME should have policies to:
– Communicate a clear objective in terms of budget;
– Safeguard its assets;
– Segregation of duties.
In our HMRC compliance parallel this might be an expense claim policy that clearly communicates to the employees in the first instance what can be incurred as an expense (and controlled financially by budgetary control), a standardised system for claiming the expenses authorised by appropriate levels of management, and finally a separate individual responsible for handling the expense claim and processing the payment.
The same basic principles of Communication – Safeguarding – Authorisation – Segregation of Duties can be applied to almost every area of a business, and also not to just ensure compliance with laws and regulations, but help with running the operations efficiently and ultimately reliable financial reporting to prevent an unwanted “punch in the face” further down the line.Talk to Barnes Roffe today