With its tax reliefs improving over recent years, Research & Development claims should be given more attention.

For SMEs, when you spend £100 on R&D, your corporation tax is not only reduced by the £100 you've spent, but also by an additional £125, taking the total deduction against your company bill to £225.

If you're paying 20% corporation tax, you've saved additional tax of £25 (£125 @ 20%), taking total tax saved to £45 (£225 @ 20%).

Timing is everything for these sole traders and limited companies.

Where a small B2C business is having a bad time, usually on the high street, their turnover may now be lower than in the past and under the VAT threshold of £77k over the last 12 months.

De registering for VAT is very tempting as it either improves your margins, or allows you to price more competitively, or a mixture of both.

We are seeing lots of examples of companies being set up incorrectly.

Incorporation agents and companies house let you set up your company without many checks and balances.

Here are 8 things you need to know:

Business Records Checks are coming to the South East after Christmas. Happy New Year!

Business Records Checks need not cause SMEs many problems, but there are some pertinent points to know:

1. Initial contact is a letter from HMRC warning of a forthcoming phone call.
2. Your accountant or tax agent will NOT receive a copy of this letter, so you must tell him/her.
3. HMRC may prefer to talk to you, but they should agree to talk to your agent instead.
4. If the phone call doesn't allay HMRC's concerns they are likely to make a visit to the business premises, which is often your home.
5. HMRC need to know your records are REQUISITE to submit a correct and complete tax return. This might mean your small spread sheet and a plastic wallet of receipts in date order is perfectly appropriate.
6. You don't need to know double entry book keeping or have a software package to keep adequate records.
7. HMRC can't insist on you running a business bank account, however, businesses often find they get to a point that this makes their life clearer and simpler.
8.  Even after a visit, HMRC shouldn't charge a penalty if you make the changes you agreed to.

In summary, keep your accountant or agent informed, and if you present a clear picture of how you keep your records to make sure all income and appropriate costs are recorded, Business Records Checks shouldn't be something to cause you undue concern.