According to the Chartered Institute of Taxation (CIOT), Her Majesty’s Revenue and Customs is to scrap its Business Records Checks program.
Tax News reports:
Business Records Checks are a compliance procedure used by HMRC to confirm that a business is keeping information on its income and expenses in sufficient details to produce an accurate tax return. According to Andrew Gotch, Chairman of the CIOT’s Owner Managed Business Sub-Committee, the scheme has not been 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,” Gotch explained.
Gotch said the CIOT hopes that HMRC’s decision heralds a more realistic approach to the perceived problem of small business record keeping. He recommended that HMRC take a more educative approach, with initiatives such as online learning packages, to help businesses keep accurate tax returns.
Gotch did however point out that scrapping Business Records Checks does not mean that HMRC will become lax on small business tax compliance. “It remains crucial for businesses of all sizes to keep records up to date and in good order. This is likely to become even more important as HMRC bring in digital tax accounts, which may require businesses to submit data more frequently,” he said.
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