HMRC set to revamp its Business Records Check programme

30th October 2013

HM Revenue and Customs (HMRC) is to place greater emphasis on educating taxpayers in its latest revamp of their Business Records Check (BRC) programme.
 
BRCs have been a topic of controversy for some time ever since their introduction back in January 2011. The programme was designed to use existing law for record-keeping requirements and penalties, with further sanctions imposed for significant failures.
 
They were promptly put on-hold for retooling early last year before relaunching last autumn to further criticism; many argued that the programme’s changes failed to address problems that led to its hiatus earlier in the year.
 
New methods of scrutinising the paperwork of small businesses will be considered from next month by BRC programme teams in the Edinburgh, Glasgow, Leeds, Bradford and Stockport areas, who will evaluate risk processes and cost-effectiveness.
 
HMRC confirmed it plans to work with professional bodies to review the benchmarks of good record-keeping and place a greater emphasis on educating small businesses how to maintain their books going forward.
 
Businesses not located in areas where BRC programmes are being redeveloped will continue to face checks as usual. Any business that received an HMRC letter dated on or before 23rd October 2013 will be required to carry out an initial telephone questionnaire.
 
SMEs facing visits from BRC teams for the first time will be offered the alternative of taking advice from HMRC’s business education and support team. Follow-up visits will continue to go ahead as arranged.
 
Mike Down, head of tax risk and investigation management at Baker Tilly, believes the BRC programme is finally being used for the educational purpose it was intended for, but is unsure whether it would prove particularly profitable for the tax authority.
 
"The BRC programme was always meant to be an education exercise and it seems from their new focus, that the education side is what the taxman will be concentrating on in the future," he said.
 
"Quite where this leaves the expected £600m of extra revenue that HMRC anticipated would result from their BRC programme is unclear."

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