Fear of the tax man means small businesses are handing over more paper work than they have to, according to a accountancy expert.

Nigel Westman, tax specialist at Little Horton Lane-based Clough & Company, said owner managers are handing over too much information to the Inland Revenue.

Mr Westman added: "An unexpected call from the tax man is enough to strike fear into the heart of most business owners, and its this fear of the tax man that often leads to over-compliance.

"Many owner managers hand over more paper work than they legally have to, as the Inland Revenue will sometimes ask for more information than they are entitled to, relying on the fact that the business owner under scrutiny won't put up any resistance."

He said the problem may get worse in the light of the Inland Revenue's tax inspection targets.

Mr Westman said: "In many instances, the Inland Revenue will request records of private bank accounts of directors.

"As long as private and business bank accounts are kept separate, then the tax man doesn't have an automatic right to access those kinds of records.

"We would always advise that business and personal accounts are kept separate to ensure that there is little room for discrepancies to occur."