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HMRC slashes Business Records Checks estimate

22nd Sep 2011
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HMRC’s Business Records Checks programme has been scaled back, despite claims by the Revenue that it is in fact extending it.

HMRC confirmed that it will check 20,000 business's records for 2012/13 - down from its original target of up to 50,000 that was published in the original consultation document.

The business plan also included a target of 20,000 visits to be completed by March 2012 and that figure has now dropped to a pro rata basis of 12,000.

In spite of these figures, HMRC claims the 'extension' of its scheme will include increasing staff working on the check from 30 to 120. A HMRC spokesperson also told AccountingWEB that the 50,000 estimate was ‘never set in stone’ and would all depend on the need.

HMRC says that it is building up the numbers in a measured way before introducing it on a larger scale. Director of local compliance, Richard Summersgill, said: "Good record-keeping helps businesses pay the right amount of tax at the right time, thereby potentially avoiding interest and penalties.

“Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success. And where a check has shown a business keeps adequate records, it gives HMRC a greater degree of assurance as to the likely accuracy of its tax returns.

“Ultimately, this is about supporting businesses and reducing the tax gap.”

PKF was less than complimentary about the BRC agenda, claiming it “will waste everyone’s time and will not help to close the current £35bn tax gap”

The firm argues that even businesses which are identified as having ‘seriously inadequate records’ for the current year are unlikely to face a record-keeping penalty straight away because HMRC cannot prove that their future tax return will be wrong.  “Therefore, the 120 staff to be employed in this exercise could be put to much better use elsewhere in HMRC in order to close the so-called ‘tax gap’.”

John Cassidy, tax investigation and dispute resolution partner at PKF, said: “These visits are bound to worry business owners and waste their time. In theory, you could just sit the inspector down in a room with your records and let them get on with it: HMRC officers are not allowed to go beyond the records and start searching the business premises. But would you be prepared to leave them alone in your office?”

The Chartered Institute of Taxation (CIOT) has also voiced ‘serious concerns’ about a number of aspects of HMRC’s programme.

CIOT president Anthony Thomas said: “In our view that is entirely the wrong approach. What counts as adequate records needs to have regard to the sort and size of business. That involves the exercise of judgement.  Expecting the smallest businesses to have perfect records kept up to date every day is frankly unrealistic, inappropriate and wholly out of kilter with the Government’s stated aim of reducing burdens on business.”

Thomas also commented on HMRC’s handling of the process of expanding the programme. “They have begun rolling out the programme before providing evidence that the trials conducted earlier this year have been cost-effective. Additionally HMRC had already started rolling out the expanded programme well before today’s announcement – communications seem very much an afterthought. That is not the way to build a good relationship with tax advisers.”

Along with the increase in staff dedicated to Business Records Checks, Danny Alexander also announced earlier in the week that additional HMRC staff (2,250 tax inspectors) will move into new anti-evasion and avoidance jobs targeting around 350,000 taxpayers.


Replies (4)

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By memyself-eye
22nd Sep 2011 17:10

Another daft idea

Consigned to the bin. As if some 'never worked in the real world' inspector could adequately judge the quality of record keeping of a micro business prior to a return being submitted- even assuming that business was prepared to let HMRC any where near their premises.

I would certainly encourage my clients to put every conceivable obsatcle in the path of such a visit under this madcap scheme - and most wouldn't need much persuading.

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By johnjenkins
26th Sep 2011 10:10


Delivered all records for period in question and 6 months either side as requested beginning of feb. Not heard a dicky bird since. Aspect enquiry middle of march. Not heard a dicky bird since.

Perhaps HMRC will now re-value their estimate of £7b lost to evasion and avoidance to the £2b which it is "on track" to collect.

Why do they come up with all this crap knowing that nobody believes a word of it. We can all say this year we will win £100m on the lottery then downsize to £44.86 or whatever. 

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By harishkanabar
26th Sep 2011 15:24

Extra HMRC staff

These extra staff being proposed would be better used in opening mail which is three months behind in most HMRC offices and in answering their 50 options' 0845 numbers which they never pick up.

When are they going to start dealing with 64-8s that are sent to CAA Team, Newcastle?


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By nogammonsinanundoubledgame
05th Oct 2011 16:01

My faith in business records checks ...

... has just been restored:

With kind regards

Clint Westwood

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