The Business Records Checks programme imposes penalties for significant record-keeping failures relating to Income Tax, Corporation Tax and VAT and applies to the self-employed, sole traders and businesses with a turnover of less than €50m and with less than 250 employees.
HMRC has confirmed that it has started a detailed review of the Business Records Checks project following criticism that its process of investigating small businesses’ paperwork had been poorly implemented. The project was launched on a pilot basis last year. HMRC now accept that:
'Business Records Checks 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'.
In the meantime a limited number of pilots will continue and they will be evaluated as part of the strategic review.
No new legislation was necessary for the introduction of the business records checks as HMRC use existing legislation regarding both record keeping requirements and penalties for failure to comply with those requirements. HMRC had previously said that they would only levy a record-keeping penalty in the most extreme cases such as a taxpayer has no records or has destroyed them. HMRC have confirmed that no such cases have been identified to date.