New HMRC Penalties & Compliance Rules: Are You at Risk?

The tax system and rules change just like UK weather. It's unpredictable and does more damage than good. With new HMRC rules and compliance, any business owner should be aware of them before big penalties knock at their door. These past decades, this agency has tightened scrutiny by introducing new laws and regulations for tracking errors. The authorities have also ramped up penalties for any late submissions and inaccuracies. This has put the spotlight on small businesses that are at risk of non-compliance more than ever. And to manage all this chaos, you need to work with an expert chartered accountant in Birmingham. In this blog, we will learn how these accountants can help you cope with the stress of HMRC's new rules and regulations.

Understanding the new HMRC compliance framework

HMRC, the authority that manages the tax evasion and keeps the businesses in check, has one simple goal. The goal is to make tax returns fully digital, transparent and responsive. With the advent of digital products, the compliances and rules have changed too much beyond expectations. HMRC's new “compliance for the future” rule between 2023 and 2025 rules out strong penalties and fines for repeat offenders, cross-checking and early intervention on tax frauds. Some of the key updates include-

There are various penalties replaced by a point system that uses flat fines in case of late submissions. Along with that, if you have multiple late submissions, then penalties will automatically apply.

●      Now all the records and data are kept in a digital format, including tax records and VAT records.

●      HMRC also uses the advanced software to match data, check for inaccuracies, supplier records and income declarations as well.

●      Digital record keeping helps in identifying even the minor errors which can also trigger investigations.

The cost of non-compliance

In these new rules and standards, even the minor mistakes will cost your business a tonne. As per the records, HMRC collected over £5.8 billion last year from businesses in the form of penalties alone. This is a surprising figure that indicates the HMRC's tight scrutiny and implementation of new digital standards. Some of the risk areas include:

Submitting late VAT or payments.

●      Claiming the wrong allowance and incorrect expenses.

●      Any discrepancies in payroll under RTI

●      Incorrect or incomplete digital records that go unreported.

These issues may be minor but can lead to financial penalties, reputation damage and even levied interest charges. And you can become the top candidate in HMRC's deliberate defaulters list.

How can chartered accountants in Birmingham help you stay compliant?

Following the rules and staying compliant is necessary to avoid any hefty fines and to safeguard the business. A chartered accountant in Birmingham will be well aware of these new standards and rules. They will update you regarding the SANS as soon as these rules are evoked and help you stay compliant with each of them. There are many benefits of hiring chartered accountants in Birmingham to minimise the risk and to boost profits.

●      They can help you in auditing regularly by ensuring that your financial records are updated as per HMRC standards.

●      Any reputable accountant will use HMRC-certified software to do any submissions and to ensure records are error-free.

●      They will also help you in finding any potential threats before they escalate.

●      Last but not least, they will help not only in filing returns but also in planning your taxes wisely to minimise liabilities.

That simply means you get the benefits of a local accountant and tailor your requirements as per the diverse business ecosystem. They have experience and expertise to handle different sectors from professional services to manufacturing units.

Final Thoughts

Although the goal of the new HMRC compliance and penalty guidelines is to address loopholes, they have also increased the stakes for companies that lag behind. Your finances will be both compliant and strategically maximised if you have trustworthy chartered accountants in Birmingham on your side. As in the age of digital taxes, the most astute companies aren't simply those that turn a profit; they're also the ones that remain on top of regulations.