For placing a greater emphasis on educating taxpayers to improve standards in record keeping, we welcome HM Revenue & Customs’ decision to re-evaluate Business Records Checks, writes Yvette Nunn, president of the Association of Taxation Technicians.
At the start of the original trial in 2011, we remained unconvinced about HMRC’s assumption that 40% of SME businesses had inadequate records and we were initially concerned that BRCs were a thinly disguised attempt to raise revenue.
HMRC’s subsequent low success rate in the last two years in identifying businesses with inadequate records, despite various changes of approach, meant that they were classically between a rock and a hard place. To continue with the programme would look like obstinacy, while significantly changing it may have looked like undoing a big thread of HMRC’s tax compliance strategy
The main problem for HMRC has been in identifying the businesses where records checks are required. Far too many businesses have been identified as having risk factors which justified HMRC in including them in the BRC programme. Hounding these businesses would have been a waste of time for HMRC and an unwelcome and unnecessary intrusion for many of the businesses concerned.
To their credit, HMRC have responded positively to criticism and worked to refine their approach to BRCs. As HMRC acknowledge, tax agents already do much to improve their clients’ record keeping. It is good that HMRC wants to work with us to improve standards. We are also looking forward to working with HMRC to review the benchmarks of what “adequate” recordkeeping should be.