HMRC published a Consultation Paper on 17th December announcing that they intend to start a programme of Business Records Checks (BRCs) that will review both the adequacy and accuracy of business records within the SME sector.
HMRC projects 50,000 reviews annually for the next 4 years.
Additionally, the BRC programme will be accompanied by a tariff-based penalty regime for failure to keep proper records. Now, the maximum penalty for failure to maintain business records currently stands (and will remain) at £3,000, but the imposition of any penalty – let alone the maximum – has historically been quite rare. HMRC have said that they do not intend to have a regime which simply levies £3,000 every time there is a failure to keep proper records. The implication is that some level of penalty will be charged, the question is merely how much.
Furthermore, HMRC state in their impact assessment that this initiative will bring in £600million over the four years. Not to be cynical, but is it a coincidence that 4 x 50,000 x £3,000 comes to … wait for it… £600million?!?
We will continue to keep abreast of the consultation process and thereafter because, of course, the BRC is only Step 1 for clients with Step 2 potentially being an intervention based on the conclusion of the BRC.
If you would like guidance as as to how our fee protection insurance will respond to BRCs then please contact us.
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