October 22 ,2015 | by Erin O’Neill

Taxation body welcomes HMRC scrapping Business Record Checks

HMRC scrapping Business Record Checks

The announcement that HM Revenue and Customs (HMRC) is getting rid of Business Record Checks has been welcomed by the Chartered Institute of Taxation (CIOT).

The checks were used by HMRC to confirm that detailed data is being kept by a business on both sales income and expenses needed to produce an accurate tax return.

Ineffective

However, the compliance procedure has been criticised in the past for not being effective, and the news that it is being withdrawn has been called "a victory for common sense" by the CIOT.

Chairman of the Chartered Institute of Taxation’s Owner Managed Business Sub-Committee, Andrew Gotch, said: “Tax advisers are strongly supportive of efforts to improve record keeping by business but, as HMRC themselves acknowledge, this initiative has not proved a cost-effective way of achieving the desired result.

“Despite efforts by HMRC to identify businesses at ‘high risk’ of having inadequate records most of those they called on were found to be keeping records to an acceptable standard. The evidence is that records are being kept to an appropriate standard by most small businesses in the UK.”

Good records

The CIOT acknowledges that business owners need to keep good records in order to create accurate accounts to be used in tax returns. It also recommends using HMRC’s online learning packages as part of a new approach to record keeping.

The CIOT’s Low Incomes Tax Reform Group had discussed the issue of Business Record Checks with HMRC and was involved in the new announcement.

Calling the decision to scrap the process the right decision, the group’s chairman Anthony Thomas said that a new approach focused on educating new businesses about good practice was better than catching them out after they had become non-compliant.

Erin O’Neill

Erin O’Neill is an LSBF News Writer who reports on small business, careers, technology and education news.

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