News Release issued by
the COI News Distribution Service on 22 September 2011
HM Revenue
& Customs (HMRC) has announced an extension of its
Business Records Checks programme.
Business Records Checks were piloted earlier this year in eight
key areas, and involve checks on the adequacy of small and
medium-sized enterprises’ business records.
The pilots found that around 44 per cent of businesses visited
had issues with their record-keeping, while around 12 per cent of
those visited had seriously inadequate records.
HMRC will be now be extending this activity from mid-September to
cover a number of key areas across the UK. As part of this, the
number of full-time staff employed on the programme will rise from
30 to 120.
HMRC plans to complete up to 12,000 Business Records Checks by
the end of the current financial year, with 20,000 provisionally
planned for 2012/13. HMRC is increasing the number of visits, so
it can refine the process, before final decisions on a national
roll-out are taken in the New Year.
Initially, HMRC will only levy a record-keeping penalty in the
most extreme cases of poor record-keeping. In the longer-term,
HMRC intends to issue penalties of up to £3,000 for serious
inadequacies in record-keeping. HMRC will issue guidance on this,
and make a further announcement on when it will happen, in due course.
HMRC’s 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.”
For further information on record-keeping, visit www.hmrc.gov.uk/record-keeping
Notes for editors
1. The Business Records Checks pilots involved around 800 visits,
focusing on eight different sites (Edinburgh, Irvine, Sunderland,
Liverpool, Manchester, Stockport, Sheffield and Portsmouth). The
extended programme of visits will cover key areas in England,
Scotland, Wales and Northern Ireland.
2. Research by the Organisation for Economic Cooperation and
Development (OECD) indicates that poor business record-keeping
generally leads to an underassessment of tax, even where there is
an audit-type check into a return for the period covered by such
records. On this basis, poor business record-keeping is
responsible for a loss of tax in up to two million SME cases annually.
3. A guide to setting up a basic record-keeping system is
available from the Business Link website at www.businesslink.gov.uk/startrecordkeeping/
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