Beware if you do not maintain accurate and up to date records for your business?
Since they were first proposed in December 2010, HMRC’s Business Records checks (BRCs), to ensure that ‘adequate’ records are being maintained by businesses, have been dogged by controversy, and clearly they could not continue in their current format. And, indeed, there were thoughts that BRC’s would be abandoned altogether in that the rate of ‘failures’ in the maintenance of proper records amongst those inspected was much lower than expected.
But unfortunately ‘no’. BRC’s are not going to be abandoned. In fact, worse than that, HMRC propose tightening the focus of BRCs and to make them more integrated into HMRC’s mainstream compliance activities.
There will, thankfully, be a pause in BRC’s until April 2012, during which time HMRC will consult with the representative professional bodies to define clearly what constitutes ‘adequate’ records for the purposes of BRC. And, following this, the guidance and training given to visiting officers would be amended as necessary.
Also, there is a more realistic approach being undertaken in that HMRC now suggest only 20,000 BRC’s a year (compared to original target of 50,000) and that the expected annual haul in penalties will probably amount to less than a quarter of the originally anticipated £500 million pa.
What is not in doubt however is that the penalties on businesses for ‘inadequate’ records keeping will remain significant (currently around £3,000), and a new tariff will be published in due course.
So why this ‘advisory’ now, when the revised format of BRC’s are still in the melting pot?
The reason - many of you have business years ending 31st March. So, with only 6 weeks to go, now is the right time to consider the ‘adequacy’ of your accounting records – ie do you maintain accurate and up to date records for your business?
If not, then introducing an ‘adequate’ system of record keeping with the start of your new trading period makes solid sense.
Not sure? Then give us a call. We can also discuss the advantages or issues with various software packages available too. And for your information, a number of clients are switching to Liberty Accounts because of the benefits and flexibility this system offers you.
But please, in your deliberations, remember that the primary purpose of good accounting records are not just to keep HMRC happy – good accounting records actually represent the dials of your business machine, and in tuning your business machine to optimum performance and efficiency you need continuous and accurate data. So your choice of accounting and management software is important.