Business records checks

HMRC relaunched its Business Record Check (BRC) initiative on 1 November 2012. HMRC has the power to impose penalties where

EGL P&L web

EGL P&L web (Photo credit: word_dancer51)

records are deficient. When the program was first unveiled in January 2011, HMRC intended to visit 50,000 small businesses across the UK. A year later the whole process was reviewed and subsequently suspended following concerns raised by professional bodies and accountants. According to HMRC: “Up until 17 February 2012, 3,431 BRCs 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. Following a review, HMRC announced a fresh approach to its pilot BRC programme on 3 February 2012. The review of the pilot programme, which included discussions with trade and professional bodies’ representatives, found clear evidence that the programme was effective in improving record-keeping practices amongst SMEs. However, it recommended that the checks were better targeted in future, and linked to wider education and support activities. In order to implement the review’s recommendations, all new BRC activity was paused from 3 February to 31 October 2012 to allow HMRC to redesign the BRC process.”

Essentially, a BRC is just what it says on the tin, an enquiry from HMRC staff to make sure that record keeping is adequate. The relaunch has introduced a change of emphasis: HMRC now intends to:

• Write to those SMEs selected for a BRC.

• Telephone the selected SMEs to talk through their business record keeping. The call is expected to last 10 – 15 minutes. Based on the responses received:

• The HMRC officer will assess whether a face to face BRC visit is required.

• If the business records are deemed to be adequate, the HMRC officer making the call will tell the SME and then confirm the decision in writing.

• If the business records are deemed to require improvement, an HMRC officer from the Business Education and Support Team will make contact with the SME.

• If the business records are deemed to be inadequate and a visit required, the HMRC officer will ask one of their colleagues on the booking team to call to make the arrangements.

This appears to be very similar to the traffic light system used by HMRC prior to the suspension. Adequate records were given the green light, records in need of improvement were given the amber light and inadequate records awarded a red light.

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