Will your records pass the test?
HMRC restarted their business records checks in November 2012 on the expectation that such checks will increase the tax yield significantly. During a pilot of the scheme HMRC state that 10% of the 2,437 businesses they visited had inadequate records and a further 26% had records that gave rise to concerns.
The business records check(BRC) will comprise a four stage process:
- HMRC’s identification of a risk of inadequate records.
- An initial phone call by HMRC to the taxpayer to ascertain whether a business records visit is necessary.
- The business records check itself
- Follow-up action and a second visit.
HMRC will contact the taxpayer as opposed to the Accountant so it is important that the Accountant is informed of any such contact immediately,
If HMRC consider that the records are inadequate a record keeping penalty may be imposed (usually £500). That may not be the end of the problem as when your tax return is submitted,
HMRC are more likely to open an enquiry into the reported profits.
It is important that you review the records you maintain and discuss any concerns with your Accountant now.
Should you require any further information please contact Green & Co.