HMRC (VAT Division) have written to a client asking for a full backup of Sage for 2 years. They say that it is a new procedure intended to save businesses time and possible inconvenience and allow them to be more focussed with their audit procedures. We are loath to allow HMRC a full backup so that they can crawl all over the records at their own leisure. The client has a turnover of £1.4m, supplies products to the security industry, and is completely straight but... My clients are concerned (and so am I!) as to the possible security of the data; allowing HMRC complete access to all records at their own leisure; and, the big brother aspect of the exercise. Should we comply with the request or resist it?
Ian Dalzell
Replies (11)
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Sorry - they're entitled
If they want to see the business records they can do that - and computer records count as business records these days. They are NOT however auditors of computing (or any other) records/systems so I'd want chapter and verse before making any decision AND I'd want to have a full record of what they did.
but...
are they entitled to view your records away from the business premises?
You might consider whether the business records are the Sage back up data files or the Sage application AND the data that goes with it, as a whole? I would argue it is the latter and you certainly do not have a licence with Sage that would allow you to supply third parties with rights to use your licence on their computer equipment.
So you are probably able to allow them to view (and I would set up a user with view rights only) your accounting data from one of your workstations using the original application, but not much more.
This would be a dangerous practice. Presuably Sage will warrant that their software will produce reliable results with reports suitably written, but what if HMRC make an error in interpreting your data and as a result issue you with an assessment? To what extent would you be able to challenge that?
Sage Info
I understand that HMRC have attended Sage courses, therefore it is a reasonable assumption that they have aquired the software, hence the request for backup copies.
If you do not want them to have access to certain parts of the nominal ledger why not try and give them a print out (or electronic?) copy of the VAT accounts only.
its a great IDEA according to HMRC
John Newth has brought IDEA to our attention, it is a new software tool apparently used by HMRC to check all computer acs for the words hospitality enetrtainment etc.
i doubt that they will be looking deeply at the accounts, sounds as if there are just trying to be more productive, but be aware of comments below.
you can carry our the same exercise your self using a data mining program such as Monarch, if the software itself lacks search capacity.
one thing about sage to check before and if you send a backup is that ceared , canceled transactions can be read. this used to be in file maintenance tho not sure about v11
Refuse the request
On a recent investigations lecture it was suggested that you should always refuse this request on the grounds that it is not possible to narrow the focus of the dataset to the two years in question.
It was also pointed out that the information is sent to a central processing unit who are several months behind on dealing with such requests and that typically the Inspector will re-write after a few months requesting paper copies of information.
IDEA
Sage data files can indeed be imported into IDEA, with a bit of fiddling, for analysis. Anyone can buy it, have a look at http://www.caseware.com/fsh.asp.
care required
If you do, make sure you ONLY provide what has been asked for and not going back further.
This is quite a common request though.