At a time when many small businesses are, quite rightly, employing their resources fully in keeping the business afloat we now hear that our friends at HMRC, whilst increasing their number of inspections, are failing to find errors in 73% of their visits.

Introduced in April 2011, the ‘business record check’ (BRC) programme entails a visit by HMRC to a company during which the accounts and employment records are closely inspected. The programme faltered in its early stages and was temporarily withdrawn due to complaints from both companies and accountants. It was reintroduced in November 2012.

Perversely although HMRC did not have sufficient manpower to reach its inspection target figures the rate of inspections is growing. Figures compiled by PFP have shown that in excess of 5,500 companies were visited in the year to April 2104, an increase of over 2,000 when compared to the period from April 2011 to February 2012.

So the time and resources of 5,500 small businesses were engaged with HMRC in BRC checks in one year and you would have thought that many would have found themselves having to pay the £3,000 fine, on top of any underpaid tax – a very satisfying take for HMRC. But no almost three quarters of the businesses visited were found ‘not guilty’ of significant errors or anomalies.

An HMRC spokesman has said that the programme has been scaled down and was being better targeted at businesses ‘at risk of having inadequate records’. This apparently enables HMRC to better help those with record keeping problems and to reduce the burden on ‘the good guys’.

I am not sure how HMRC goes about distinguishing the wheat from the chaff but one thing is certain, they will continue to target specific business sectors where they can be fairly certain of yielding a ‘tax take’.

Anyone receiving notification of a BRC should immediately contact their accountant for guidance and assistance.

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