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Business Records Checks are being re-launched by HM Revenue and Customs (HMRC) today, following a review and extensive stakeholder consultation.

The substantially redesigned Business Records Checks programme now involves a new step-by-step approach, with a much greater emphasis on education and support.

Businesses need to keep records which can clearly demonstrate they are meeting their tax responsibilities. From today, HMRC will send letters to businesses it believes may be at risk of keeping inadequate records, advising the business that HMRC will be phoning them to discuss their business records. This call will then take the customer through a set of questions to assess the customer’s record-keeping affairs. Depending on the outcome of this conversation, HMRC will then determine whether the customer could benefit from tailored educational support and whether a Business Records Checks visit is necessary.

Where a visit reveals the customer is keeping inadequate records, HMRC will provide guidance on what the customer needs to do to improve their record keeping. HMRC will then arrange a follow up visit, normally three months later, giving the business a reasonable time to make the necessary improvements to their record-keeping processes. If, on the second visit, the records have not improved to an adequate standard, then HMRC may charge a penalty.

The Business Records Checks programme will be rolled-out, region by region, over a 14-week period. The planned timetable for visits to re-commence is as follows:

• London & Anglia – 26 November 2012
• South East England – 14 January 2013
• Scotland – 14 January 2013
• Northern Ireland – 14 January 2013
• Central England – 21 January 2013
• East of England – 28 January 2013
• North Wales & the North West of England – 28 January 2013
• South Wales & the South West of England – 4 February 2013

HMRC’s Director of Local Compliance, Richard Summersgill, said:

“We’ve listened to businesses and agents, and revamped our Business Records Checks programme to make it more streamlined, targeted and better focused on education.

The visits offer benefits for businesses at risk of keeping inadequate records. Adequate records help businesses pay the right amount of tax at the right time, thereby avoiding interest and penalties for errors and late payment, whilst also giving HMRC greater assurance when a business submits its tax returns.”

Notes

1. A pilot programme of business records checks began in April 2011. Up until 17 February 2012, 3,431 business records checks had been carried out on the records of small business customers. These checks found that 36 per cent of businesses visited had some issue with their record keeping, with 10 per cent of all businesses visited having issues serious enough to warrant a follow-up visit. Where follow up visits were undertaken, it was found that the majority of these customers had improved their record-keeping affairs – indicating a Business Records Checks visit did have a positive effect on customers’ record-keeping.
2. On 3 February 2012, HMRC announced it would be taking a fresh approach to its Business Records Checks programme, following a review. (See HMRC news release NAT 10/12 for more information.)