According to fee protection specialists PFP HMRC’s Business Record Checks programme is running at its highest level since it began in 2011, with the number of checks increasing by 60% from 3,431 (2011/12) to 5,515 (2013/14). Ironically, 73% of businesses visited were found to have adequate records. PFP further stated that that the forecast tax-take from these investigations in 2013/14 would be £49m.
This is interesting. The 27% of businesses visited, that produced the £49m, amounts to an average, additional tax bill of £32,000 for each business assessed. No doubt HMRC will want to increase these numbers.
Even at this increased level HMRC are falling well short of its original scheme to visit over 50,000 businesses in the UK.
We wonder if HMRC are getting value for money from the campaign and if it has a future?
Undoubtedly, the business record check program offers UK practitioners an opportunity to revisit the old chestnut of improving record keeping with their “paper bag” clients, but how many clients are receptive to this sort of advice? There are, of course, benefits to improved record keeping beyond mere compliance issues: availability of management information, improved credit control and so on.
It seems likely that HMRC will continue these visits and will no doubt aim to improve their returns: increase tax revenue as a percentage of their associated costs. Whether this will have a lasting and positive impact on smaller businesses remains to be seen.
Please let us have your feedback. What are your experiences? How many of your clients have had a visit? Do the reported numbers stack up? Have you tackled clients about poor record keeping and had a positive response?