HMRC pilots business record checks
Accountants have reported that their clients had started receiving letters in the past week advising them that business record checks would be taking place under HMRC’s new scheme.
AccountingWEB member yorky1000 first raised the alarm after receiving an email alert from Abbey Tax Protection that business record checks had started going out.
From letters submitted by clients, Abbey Tax consultancy and advice team manager David Marples worked out that four offices were sending out the notices. From discussions with HMRC staff members, he discovered that around 30 officers are working on the pilot and that they will be visiting around 3-4 companies a week. This means that up to 1,800 “test and learn” visits may take place before the record checks begin in earnest in July.
For clients of Abbey Tax and other insurers, the checks pose a new challenge: will they be covered by existing fee protection policies. According to Marples, the business record checks are being carried out under schedule 36 of the Finance Act 2008. “You can have cover for that. The practice will decide which cover they like - full enquiries, aspect enquiries or schedule 36 - and pay for what they get.”
Paragraph 4.40 of HMRC’s Business Record Checks consultation document (85kb PDF) raised the possibility of trial period to iron out any “wrinkles” before full checks begin, and asked whether it would be useful to do so. However the dispatch of letters on what appears to be the first working day after the extended consultation date closed suggests that the department had already made up its mind, but had failed to inform anyone.
CIOT deputy president Anthony Thomas commented: “HMRC’s reassurance that this is a ‘test and learn’ pilot where no penalties will be levelled, other than in exceptional circumstances, is welcome. However they should have made this clear to tax advisers, business organisations and, above all, those taxpayers – represented and unrepresented – they are targeting, from the outset.”