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HMRC’s Business Records Checks (BRCs) re-started in 2012, with some modifications following a review and re-think after the original pilot

At a glance

Under a four step approach, which is being rolled out regionally over a 14 week period, businesses are risk assessed after they have completed a questionnaire.

What's new?

HMRC began to wind down their business records checks in late October 2015. Since then no new checks have been initiated by HMRC but the penalties for failure to keep and retain records (see below) continue to apply.

What records are required to be kept and preserved

Tax penalties and record checks

The Chartered Institute of Taxation (CIOT) has expressed some concerns about penalties: taxpayers could be penalised twice.

Keeping and preserving records - up to £3,000

Fines are scaled as follows:

Tax pitfall: the difficulty here is that the above "keeping and preserving" penalty can only be charged if the records are inadequate, and a tribunal can only determine that records are inaccurate if one is unable to complete a return from them. So in reality until a return has been completed the true nature of the record keeping (and preserving) cannot be determined.

Once a return is show to be deficient, a further penalty may apply.

Error or mistake - up to 100% of tax lost