Business Records Checks Resume

Date: 19/12/12

Business Records Checks Resume

HM Revenue and Customs (HMRC) has now relaunched its Business Records Checks (BRC) programme.

The pilot scheme was first launched in April 2011, but BRCs were suspended in March this year to allow further consultation to be carried out, amid claims that they were ‘heavy handed’ and increased the compliance burden on smaller businesses.

Following consultation with professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW) and some revision of the approach, HMRC began rolling out the new programme from 1 November 2012.  Every region is expected to be covered by the roll-out by early 2013.

Under the programme, HMRC will use its computer risk analysis systems to identify possible cases for BRCs, before writing to those identified informing that they will be contacted by telephone to answer a questionnaire.  HMRC will then decide whether there is a real risk that the business records are inadequate and whether the business needs support and advice on record keeping or an HMRC visit to identify whether records are ‘adequate’ enough to enable a correct and complete return to be prepared.

If records are found to be inadequate HMRC will explain why they believe this, giving the business owner an opportunity to challenge that view.   If the records are accepted as inadequate, HMRC will visit again three months later to check what changes have been implemented and whether these have addressed the concerns.  If changes have not been made or have not satisfied HMRC’s concerns then the business in question could receive a record-keeping failure penalty, usually £500.  A penalty of £3,000 may be imposed if during the course of a BRC HMRC finds that the taxpayer has deliberately destroyed records.

It is interesting to note that the revised programme focuses on whether business records are ‘adequate’, so in most cases it is possible that fairly basic records such as bank statements will suffice.

However, it is still important for all business owners to ensure that their records are in order as soon as possible, to prevent any problems and penalties further down the line.  Business owners may wish to contact their professional adviser if they receive one of the HMRC warning letters, so their adviser may initiate the call to HMRC and assist in making sure any problems are minimised.

For further information please contact Tim Preece at our office.

Tim Preece FCCA

Author: Tim Preece FCCA

A former pupil at Lancaster Royal Grammar School, Tim joined Scott & Wilkinson in 1992 as a trainee after completing a degree in Maths and Economics at Leeds University and qualified as an Accountant in 1996. Tim was...

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