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HMRC have decided to carry out a detailed review of their business records checks (BRCs) project, following concerns from professional bodies and accountants.
BRCs were launched as pilot last spring, entailing Revenue officers visiting businesses to decide whether their paperwork is adequate for producing tax returns.
‘HMRC recognise that the launch of the BRC pilots has caused considerable concern to the tax profession and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage,' said the department.
‘In the light of these concerns, HMRC will undertake a strategic review of the project in consultation with the professional and representative bodies. The purpose of the review is to consider the overall aims of BRCs, examine whether the current approach is the best way of achieving the policy objectives and identify what changes are needed to ensure that the objectives are achieved.
‘In the meantime, HMRC will continue with a limited number of BRC pilots and the results of them will be evaluated as part of the review.'
The department continued, ‘Given the concerns over possible penalties… HMRC will not (except in extreme cases such as where a taxpayer has no records or has destroyed them) be seeking to use the record-keeping penalty provision during the pilots. No such cases have been identified so far.
‘HMRC and the tax profession share the overriding policy objective, namely to ensure that businesses’ record-keeping meets the necessary statutory requirements and that their records are sufficient to enable a correct and complete tax return to be submitted within the time limits.
‘HMRC are grateful to the representatives of business and the agent bodies for agreeing to work with them on the review and look forward to developing a shared understanding of how the overriding policy objective can be implemented with representatives’ full support.’
Initial findings of the taxman's review are expected to be published early this year.
