EICG » employment tax

Business Record Checks

Brenda — Tue, 04 Oct 2011 14:05:29 +0000

During a business records check (BRC) an HMRC officer will view the business records of the current accounting period and assess whether those records are ‘adequate’. In this context ‘adequate’ should mean the records are sufficient to compile accurate tax and VAT returns, but the BRC brief implies the HMRC officer will be looking for the following errors in the business records:

Understated sales;
Overstated expenses; and
Private expenditure claimed as business costs.

If the HMRC officer concludes the business has failed to keep adequate records he can impose a penalty of up to £3,000.

HMRC tested their BRC programme between 4 April and 15 July 2011, during which up to 800 businesses were advised about their records, but no penalties were levied. However, since mid September HMRC has expanded the BRC programme and is increasing the number of HMRC officers involved from 30 to 120. HMRC plan to conduct approximately 12,000 BRC visits before 1 April 2012, and a further 20,000 BRC visits in 2012/13. On those numbers at least one of your clients is likely to be subject to a BRC in the next 18 months.

Business who were visited in the first stage of the BRC programme, and who were judged to have issues with their record keeping, are receiving follow-up letters from HMRC requesting a repeat visit; ‘to check that the appropriate improvements have been made.’ Remember the records under inspection are those raw documents that have not yet been sorted or vetted by someone who understands exactly which expenses can be claimed for tax purpose

In this second stage of the BRC programme HMRC is prepared to impose penalties for serious record keeping failures. However, certain professional bodies, including myself are not convinced of the legal basis for charging such penalties, before the tax return has been submitted.

New Business National Insurance Holiday Scheme – be careful

Brenda — Mon, 28 Jun 2010 13:54:26 +0000

The Budget announced a welcome break for new businesses outside the South East, that of a National Insurance Holiday giving new companies the chance to take on employees, the first 10 of which will not have employers NIC due for the first 12 months, giving a potential saving of £50,000 BUT and it is a big but for new businesses. The Budget statements have been released and alluded to the fact that new businesses from 22 June 2010 would potentially qualify but the scheme itself was unlikely to be ready until September – so immediate confusion caused – qualifying companies from 22 June but scheme not ready until September so many new businesses are thinking that the NIC holiday will apply to them if they set up business after 22 June – yes and no – not all companies will qualify (exclusions on fishing, agriculture and mining already mentioned) but the NIC holiday CAN’T start until the scheme officially starts, so even if you set up a company (and are trading) in the period 22 June to official scheme start up you CAN’T apply the NIC holiday, you need to operate the “normal” NIC rules and this may catch out a lot of new businesses. The NIC holiday will start when the scheme officially starts whether it be September of another future date. It is important that companies do not fall foul of this rule as penalties are drachonian. If you are in any doubt contact the employment tax expert

Welcome to our NEW website

admin — Mon, 09 Nov 2009 15:52:42 +0000

Thanks to feedback from our existing clients we have relaunched our Employment Tax Website to provide more detailed information on

HMRC Tax Investigations
Car Scheme Solutions
Employment Status Solutions
Salary Sacrifice Schemes
Termination payments

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