The launch of business record checks by the HM Revenue and Customs marks the start of a new regime aimed at making property investors and small businesses toe the line over record keeping.
Property businesses – from large corporates down to accidental landlords with a single property – can expect a call from the tax man quizzing them about their business record keeping.
Failing to give the right answers will trigger a compliance visit from a tax inspector around 90 days after the call, to give the business a chance to get on track with book-keeping.
If the inspector identifies record issues during the visit, more visits and fines could follow.
A pilot business records checks campaign ran between April 2011 and February 2012, looking at looked at 3,430 businesses. Inspectors identified record keeping problems at 36, while 10% had serious problems requiring follow-up visits.
The checks will start in London and East Anglia from November 26, and will roll out to cover the whole country by the end of February 2013.
HMRC’s Director of Local Compliance Richard Summersgill said: “We’ve listened to businesses and agents, and revamped our business records checks programme to make it more streamlined, targeted and better focused on education.
“The visits offer benefits for businesses at risk of keeping inadequate records. Adequate records help businesses pay the right amount of tax at the right time, thereby avoiding interest and penalties for errors...
and late payment, whilst also giving HMRC greater assurance when a business submits its tax returns.”
Business record checks is a major switch in tax investigation practice.
Until now, HMRC would check business records if errors were found in a tax return, howver the new campaign aims to highlight and rectify errors before a tax return is submitted.
HMRC publishes a free guide to business record keeping online (Opens in new window)©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law; always seek professional advice. Legislation changes, so check dates on these articles. If you have questions go to the LandlordZONE® Forums