In December 2010 it was announced that during the second half of 2011 Record checks conducted by the HMRC would come into play, allowing HMRC staff to visit the business premises and ask to view all business records. The Business Records Checks are likely to consist of a visit to the business premises by at least one officer and may last for a period up to four hours.
HMRC believes that up to 40% of the current five million SME’s maintain inadequate records and, as a consequence of this, an estimated amount of up to £600m will be collected over the next four years in tax and penalties.
Business record checks will be targeting all small to medium businesses (250 employees or less) with a turnover of £40m or less. There may be as many as 50,000 businesses targeted annually and, if record keeping is deemed to be poor, may result in penalties and future checks not only from this department but other HMRC departments such as: VAT, NIC and PAYE. The level of penalty could be up to £3000.
There is most likely going to be a period of adjustment given from when the final details are announced to when penalties will be implemented. It is therefore important all areas of business records are up-to-date and accurate.
This information can be viewed in detail on the HMRC website under Business record checks: Consultation document