Business News
HMRC business record checks estimate downsized
The estimated number of checks for business records in 2012/13 outlined in the original consultation document has been considerably re-evaluated. The initial figures sat at 50,000 mark, which has now been reduced to 20,000 that will be checked by HMRC. There was also due to be 20,000 visit checks carried out by March 2012, but this has now been reduced sizably to 12,000, despite the HMRC sticking to their claim that the scheme has been extended, with a spokesperson citing that the figures were ‘never set in stone’.
What has increased is the number of staff working on the project – with 30 heads initially due to carry out the checks, this looks to now be 120 working on the scheme. This is alongside the announcement made by Danny Alexander that around 2,250 tax inspectors will be moving into new roles targeting anti evasion, which will be looking into the dealings of 350,000 taxpayers.
HMRC have said that rather than steaming in with a large scale operation, they are looking to build up the scheme and the number of checks carried out in a more measured and strategic way. Richard Summersgill, Director of local compliance 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.”
This complimentary verdict on the BRC agenda is not quite shared by everyone, particularly PKF, which claimed that it would “waste everyone’s time and will not help to close the current £35bn tax gap”. PKF also argued that those businesses that would be highlighted and identified as having serious flaws in their records would still be unlikely to be penalised with a charge immediately due to the fact that HMRC will not be able to prove that their tax return will be incorrect in future. “Therefore, the 120 staff to be employed in this exercise could be put to much better use elsewhere in HMRC in order to close the so-called ‘tax gap’.”
PKF tax investigation and dispute resolution partner John Cassidy has said, “These visits are bound to worry business owners and waste their time. In theory, you could just sit the inspector down in a room with your records and let them get on with it: HMRC officers are not allowed to go beyond the records and start searching the business premises. But would you be prepared to leave them alone in your office?”
The Chartered Institute of Taxation have also had their say on the matter, showing equal concern for the validity of the project, with President Anthony Thomas speaking for them: “In our view that is entirely the wrong approach. What counts as adequate records needs to have regard to the sort and size of business. That involves the exercise of judgement. Expecting the smallest businesses to have perfect records kept up to date every day is frankly unrealistic, inappropriate and wholly out of kilter with the Government’s stated aim of reducing burdens on business.”
Commenting on the handling of the process by HMRC, Thomas added “They have begun rolling out the programme before providing evidence that the trials conducted earlier this year have been cost-effective. Additionally HMRC had already started rolling out the expanded programme well before today’s announcement – communications seem very much an afterthought. That is not the way to build a good relationship with tax advisers.”
