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HMRC business record checks

2024 business resolutions

According to insurers PFP, HMRC business record checks are on the increase.

 In the tax year 2013/14 HMRC checked 5,515 sets of business records compared to just 3,431 checks in 2011/12, an increase of 60%. Interestingly, of the records checked 73% were found to have no significant errors.

Since November 2012, HMRC have adopted a fresh approach to their business record check visits. On the HMRC website we are advised:

“Customers who are more likely to be at risk of having inadequate records will be contacted by letter to arrange for HMRC to call them to go through a short questionnaire.

Depending on the outcome of this call, HMRC will confirm to some customers that no further action is required. Where some issues are identified, customers will be offered targeted self-help education options. Customers who are assessed as being at risk of keeping inadequate records will be referred for a BRC visit.”

The reasoning behind the record check initiative is to find businesses that are submitting tax returns based on inadequate information. If you record keeping is poor, then your tax return is likely to be inaccurate.

If you are required to have a visit from HMRC to check out your record keeping this is what HMRC advise you can expect:

If we feel you need a face to face visit, HMRC will contact you to agree a date and time. The visit will usually take around two hours.

On the visit the HMRC officer will:

  • ask you to explain how you run your business
  • note how you keep your business records
  • check a sample of your current business records – usually your records for the last four months and arrive at a decision as to whether your business records are adequate or not

If your records are adequate the visiting officer will tell you at the visit and then confirm it in writing a few days later. This will be the end of your business records check.

If the visiting officer finds your record keeping needs improving they will discuss this with you and your agent, if they are at the meeting. The officer will then advise what you need to do to make your records adequate and what will happen next.

We are happy to provide readers who are concerned about their business records with a preliminary assessment, and if required, advice on how to change their systems.

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