Business Records Checks - Should You Worry?

Last year, the pilot HMRC Business Records Checks programme aimed at small to medium-sized enterprises (SME) revealed that 36% of businesses had some issues with their record-keeping. Now HMRC is taking a fresh approach and broadening their search to cover many more businesses. Want to know how this could affect you? Read on.

Getting a visit from the tax man

If you are an SME you will probably know about the HMRC business records checks already. The initiative revealed some holes in SME's record-keeping, but it also "found clear evidence that the Business Records Checks (BRC) programme is effective in improving record-keeping practices in smaller businesses". Did you know that a new approach to business records checks started again on 1 November 2012? HMRC is now investigating small and medium-sized enterprises with an annual turnover of below £30 million and who employ less than 250 people across the UK. If your business falls within this category, you might get a visit from the tax man (or at least a call)...

Why focus on business records?

HMRC will be calling to make sure that your records are accurate. It is a legal requirement to keep sufficient business records in order to complete your tax returns correctly. HMRC has the power to audit those records and can impose significant penalties if there are any inadequacies, or if insufficient tax has been paid.

For example, if you don't have the right evidence to back up your expenses claims you are not allowed to claim the VAT on those receipts. If you do claim it, however, you risk having to pay that money back along with any penalties that HMRC choose to impose should your paperwork not be in order.

What happens if you are part of the records check?

HMRC is getting much more efficient. Rather than coming to your door, if you are at risk of having inadequate records HMRC may send you a letter and then they will give you a phone call to see if they can identify any inadequacies in the record-keeping. (Read more about what will happen if HMRC wants to check your business.)

It's nothing to worry about as long as your business records are in order. You shouldn't get a visit or a form if you've got things right. But to be absolutely certain, it's better to get your processes and procedures sorted sooner rather than later.

HMRC won't be bothering people who are compliant and have no discrepancies with their expenses. If, after their in initial call however, they identify that the business's record keeping is not up to scratch they will target people who they feel need educating in order to improve their processes.

What can you do if you’re concerned?

Naturally, some of these checks will relate to your company expenses. If you’re concerned that HMRC might find your records lacking, you don't need to worry - help is available. Fortunately there are companies out there who can help make sure that you are following the right procedures and can even guarantee 100% HMRC VAT compliance when it comes to your expenses. Then, when HMRC gives you a call you can rest assured that at least these business records will be acceptable in their eyes.

Want to know more about how you can ensure your expenses are compliant with HMRC guidelines? Go to the Concur compliance web page.

ABOUT Matt Lewis

Matt Lewis is the EMEA Compliance Director at Concur where he focuses on making sure that VAT, HMRC and compliance are high on the corporate agenda and an integral part of the Concur solution. Matt has worked in the international VAT and tax arena for the last 19 years. He started by working at HMRC and latterly has been responsible for VAT at a senior level in international groups such as Orange, Virgin, Nortel and Savills. Most of that time he has been involved in developing and automating processes around complex rules to improve compliance. Outside of work, Matt enjoys spending time with his children and has a passion for all things with an engine!

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Concur is a leading provider of integrated travel and expense management solutions. Founded in 1993 on the premise of helping drive costs out of businesses through innovation, Concur’s services are trusted by over 20,000 clients around the globe with around 30 million users. Learn more at

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