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Checks to run on test-and-learn basis

15 July 2011
Issue: 4313 / Categories: News , BRCs , Admin , Business , Income Tax
HMRC publish responses to records-review condoc

HMRC have published a summary of responses to the business records checks consultation.

The aim of the consultation (which was launched last December) was to find out how best the Revenue could implement a programme of reviews of small firms' record-keeping, with penalties for significant failures. The reactions threw up two main areas of concern for the department:

  1. What would constitute a ‘significant’ record keeping failure?
  2. The readiness of HMRC staff members to undertake a new programme of business records checks.

In the response document, the Revenue explains that it intends to first carry out checks on a test-and-learn basis. During the period, the department will not apply the penalty provision, other than in exceptional circumstances. There will be no authority to apply the penalty at local team level.

The test-and-learn will give HMRC time to consider issues on this subject through practical experience. The taxman will continue to consult on the extent of record-keeping failure that would lead to a penalty.

A clear announcement will signal the end of the test-and-learn period and the start of business records check proper, says the Revenue.

There was some controversy in the responses to the condoc over the small business checks earlier this year, which began without warning and before the consultation period ended.

HMRC admit in the response document that the trial began on 4 April, rather than from July onwards, as originally scheduled; Taxation has established this was the date on which visits began.

The Revenue has confirmed to us that business-check letters were first issued in the week beginning 21 March, only a week after the closing date for the consultation, which included a question about whether a trial period would be a advisable.

The response document makes it clear that ‘HMRC intend to press forward with the business records checks programme but are continuing to work with interested parties to develop the approach’.

Issue: 4313 / Categories: News , BRCs , Admin , Business , Income Tax
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