HMRC is to review its Business Record Checks (BRC) scheme in response to concerns raised by the tax profession.
The Revenue piloted the first phase of the scheme between April and July 2011, examining companies’ proof of expenses and income dating back years. In 2012, HMRC plans to spot check the paperwork of 20,000 companies - not 50,000 as published in the original consultation - and potentially fine those with sub-standard records up to £3,000. However, the department announced just before Christmas it will review the scheme with representative bodies to address their complaints about inadequate consultation. But HMRC will press ahead with a limited number of BRC pilots in the meantime. The Revenue said: “HMRC recognise that the launch of the BRC pilots has caused considerable concern to the tax profession and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage. In the light of these concerns, HMRC will undertake a strategic review of the project in consultation with the professional and representative bodies. “The purpose of the review is to consider the overall aims of BRCs, examine whether the current approach is the best way of achieving the policy objectives and identify what changes are needed to ensure that the objectives are achieved.”AccountingWEB contributor Simon Sweetman said of the lack of consultation: “This has been a consistent problem – HMRC has often consulted well up to the point at which it actually sends people out and then going rather off the rails because, I think, of a reluctance to let anyone ‘interfere’ with operational matters.” The ICAEW welcomed the review: “The Tax Faculty and other tax representative bodies have been concerned about BRCs from the beginning. While we support initiatives to help businesses keep good records, we are not convinced that the BRC approach is the best way to achieve this. We are concerned that HMRC may set unrealistic criteria for small business records and that BRCs will place a considerable compliance burden on SMEs and their advisers.”