Partner Article

Business Records Checks – isn’t this where we came in?

Last week’s welcome announcement by HMRC that from next month Business Records Checks (BRC) will become educational rather than confrontational brings to an end one of the strangest sagas in recent tax history.

Business Records Checks first appeared in 2011 with a pilot scheme to inspect the records of SMEs, with the threat of penalties if a business failed to pull its socks up after an initial yellow card, but all the time stressing the educational aspects of the programme.

Education looked like taking a back seat, however, as it was the eye-watering estimates of how much revenue would be raised from the checks which attracted most comment – HMRC said it expected to raise £600m from 200,000 checks over a four year period: a target of 1,000 checks a week, each one effectively equating to the maximum penalty of £3,000!

By February 2012, only 3,431 checks had been carried out, with record-keeping deficiencies serious enough to warrant a follow-up visit in just ten per cent of cases. Cue a so-called ‘hiatus’ to allow HMRC to redesign the BRC process.

A year ago a more conciliatory approach to BRC was adopted but the latest announcement makes it clear that the original premise was flawed – ‘Customers whose records were not adequate on first inspection, and who received follow-up visits, all improved their record-keeping standard. HMRC have not had to charge any penalties.’

Let’s hope the Chancellor hadn’t already spent the £600m.

This was posted in Bdaily's Members' News section by Baker Tilly .