Being ready for audits and checks in your business

Most people running a business hear the word audit sooner or later.

It can mean several different things. An accountant may use it for the yearly accounts. A tax officer, a safety inspector or a fire officer may each come to check something else. Knowing who does each check, and what they look at, makes each one easier to prepare for. These notes cover England.

Keeping records ready

HMRC may check your records in a compliance check. A limited company must keep its records for 6 years from the end of the financial year they relate to. Some records need keeping for longer.

A sole trader keeps records for at least 5 years after the 31 January deadline for that tax year. HMRC can fine a company £3,000 for failing to keep accounting records.

The audit of company accounts

Some companies must have their yearly accounts audited. Many private limited companies are exempt. A company may qualify if it meets at least two of three tests on turnover, assets and staff numbers. GOV.UK sets out the current limits.

Shareholders can still ask for an audit. Those holding at least 10% of the shares can request one in writing. Some companies always need one, such as public companies and banks.

Statutory auditors and audit firms in the UK are listed on a public register. You can search it by firm name or by postcode.

A tax compliance check

HM Revenue and Customs (HMRC) runs compliance checks to make sure people pay the right tax. HMRC writes or phones to say what it wants to check. That could be accounts, a Company Tax Return or PAYE records.

If you use an accountant, HMRC contacts them instead. HMRC may ask to visit your business, and you can have an accountant or legal adviser with you. At the end, HMRC writes with the result. If you disagree, you can ask for alternative dispute resolution at any time.

A health and safety inspection

Inspectors from the Health and Safety Executive (HSE) visit workplaces. If an inspector finds a serious breach of the law, they write to the business about it. The business then pays a fee for the inspector's time, called a fee for intervention.

A business that keeps to the law pays nothing. Advice from an inspector, spoken or written, is free.

Fire safety in your premises

An employer, owner, landlord or occupier of business premises is the "responsible person" for fire safety. That person must carry out a fire risk assessment and review it regularly.