HMRC has announced it will delay the implementation of its business records checks (BRC) programme, following a review with trade and professional bodies’ representatives.
The pilot programme began in April last year but has been heavily criticised over recent months because it subjects small and medium size enterprises (SMEs) to spot checks on their business records, potentially issuing fines up to £3,000 for incorrect paperwork.
Business leaders, MPs, and business groups such as the Federation of Small Businesses, had all voiced concern over the programme’s potential to affect thousands of SMEs already struggling with HMRC red tape.
The internal review found that HMRC over stated how much the initiative would collect for the Treasury and acknowledged that it should be working in closer consultation with representative bodies as to what constitutes inadequate record keeping. It also said that further work should be done to agree on a reasonable penalty tariff.
2,437 BRCs had been carried out up until the 4 January 2012, with HMRC finding that 28 per cent of businesses had some issue with record keeping, with a further 11 per cent of these requiring a follow up visit.
However, HMRC will now postpone the scheme which was due to roll out in April this year and will instead launch a ‘revamped’ approach in the 2012/13 financial year.
HMRC’s director of local compliance, Richard Summersgill, said: “Four out of ten businesses had an issue with their business records, and of those that required a follow-up visit, we found that some 90 per cent subsequently improved their record-keeping.
However, after reviewing the pilot programme and listening to the views of businesses and representative bodies, we acknowledge the need for a fresh approach to business records checks.”
