HMRC axes Business Records Checks

The taxman’s much-disliked initiative of Business Records Checks (BRC) is to be axed, in a move that accountants say is a “victory for common sense.”

Just remodelling or replacing BRC would be unlikely to work because, to date, many of the initiative’s improvements were made by HMRC “in completely the wrong away.”

The Chartered Institute of Taxation also says that HMRC knows that BRC has not proved “cost-effective,” despite being trialled first, suspended, revamped and then revamped again.

The aim of the initiative has been questioned too, because although HMRC ran a record number of checks in 2014, about three-quarters of the targeted firms had adequate records.

This was despite “efforts by HMRC to identify businesses at ‘high risk’” said the CIOT, which disclosed the end of BRC following talks about it with HMRC and tax bodies.

“HMRC has decided to wind down the business records checks initiative,” says a Revenue memo to the bodies. “BRC has positively encouraged businesses to keep better records”.

The memo admits: “We have found that we were contacting more compliant customers than expected, because it’s proved more difficult than originally anticipated to select those customers who would benefit from a visit.”

The CIOT’s Andrew Gotch reflected: “Pulling the plug on Business Record Checks is certainly the right decision. A lot of public money and businesses’ time has been wasted”.

He added a warning that, although HMRC has made the “common sense” decision to scrap the initiative, it does not mean that companies can become complacent about paperwork.

“Keeping good records is still essential”, said Mr Gotch. “This is likely to become even more important as HMRC bring in digital tax accounts, which may require businesses to submit data more frequently.”

As to limited companies and other HMRC customers currently involved in a BRC, if they have received a letter from the department, they must still go through the phone questionnaire.

At the end of the questionnaire, the customer will be advised whether or not a visit by a BRC official is to be arranged but – if it’s not, online guidance on record-keeping will be provided.

HMRC added: “If customers have been advised that a visit is required and has still to be arranged, the visit will be booked shortly. Where a visit has been booked or customers are awaiting a follow-up visit, then these will still continue.”