They’re Back! – HMRC Business Record checks

November 5th, 2012  |  Published in Uncategorized

After a pilot scheme which disappeared earlier this year after a few months, HMRC are relaunching the Business Record Check Visits. Rolled out at different times over the country, the North West is targeted for checks to begin at the end of January 2013.

A pilot programme of Business Records Checks (BRC) began in April 2011. This involved checks by HMRC on the adequacy of Small and Medium-sized Enterprises’ (SMEs) statutory business records. SMEs are businesses with an annual turnover below £30 million who employ less than 250 people.  Up until 17 February 2012, 3,431 BRC had been carried out. These found that 36 per cent of businesses had some issue with their record-keeping of which 10 per cent had issues serious enough to warrant a follow up visit. (source – HMRC).

Here is the review paper:

Whilst promoted as ‘for your own good’, the paper reveals the intention to carry out  20,000 checks per year, and expect this to reduce the ‘tax gap’ by £49 Million in 2013/14 and £62 Million in 2014/15. This figure does not include penalties levied as a result of subsequent investigations.

“We continue to be extremely concerned that HMRC are creating an impression, wrongly in our view, that these records checks are mainly for educational purposes,” said the Low Incomes Tax Reform Group. “It is critical that businesses understand that these are serious compliance checks with potentially large penalties being levied on those who keep poor business records.”

The selection process will be based on risk assessment, so it seems logical that cash based business will be at the forefront. Such businesses in particular will need to ensure they are keeping adequate records going forward.

The intention is that businesses  will receive a letter in which Revenue & Customs will propose telephoning them to go through their records via a questionnaire.

We have experience of BRC’s from the pilot scheme, one business checked received an apparent clean bill of health,  followed almost immediately by an ‘urgent’ VAT visit – draw your own conclusions. There have been accusations that BRCs are in fact a ‘fishing expedition’.

If you receive a letter proposing to conduct a telephone questionnaire on your records, speak to me first.   










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