Why record-keeping is important
It is essential that you keep very good records of all your business transactions. This is important for several reasons:
- if you're required to hold an operating licence you must submit annual regulatory returns to the Gambling Commission
- you are required to keep certain records for Machine Games Duty (MGD) purposes
- HM Revenue & Customs (HMRC) requires you to keep certain records for inspection for six years and may check your records from time to time as part of their compliance procedures. There is an HMRC guide to business record keeping for the self-employed on the Gov.uk website. The guide explains which records you have to keep, how long you have to keep them, and what to do if they get lost or destroyed
- if HMRC decides to investigate the business it will be of real assistance to your accountant if you have kept good records. You should also try to keep records of occasions when you know or suspect that customers (or staff) are working 'fiddles', and of occasions when an abnormally high level of machines are out of action
- you must keep good cash handling records so that the risk of money laundering and other criminal activities is minimised
- health and safety rules require you to have passenger carrying machines like kiddie rides regularly inspected - and you must keep a record of the inspection. Most arcades use the ADIPS (Amusement Device Inspection Procedures Scheme) which is administered by the trade association BACTA. Visit the BACTA website for more information
- you need to know how the business is doing at any time - well kept records will tell you
- you need to be sure that untrustworthy staff are not stealing from you. Be especially careful if you are not the only person whose job it is to empty the machines
Make sure that you note down all income the business receives, and all the money that is spent, even if it is only small amounts. You should be able to show from your records how all income received by the business can be traced through until it is either spent or banked. Ask yourself if you would be satisfied that the records would reveal any dishonesty if they were written up by an employee.
Your accountant will be able to give you advice on how best to keep records. You might decide to go for a computerised system, which will help your accountant to draw up your accounts at the end of the year. Don't forget that under HMRC's Making Tax Digital (MTD) initiative you'll need to keep your VAT records digitally if your taxable turnover is above the VAT registration threshold. You can find out more about MTD on the Gov.uk website.