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CIOT: Tax advisers look forward to further involvement in changes to HMRC business record checks

CIOT: Tax advisers look forward to further involvement in changes to HMRC business record checks

The Chartered Institute of Taxation (CIOT) has responded to changes announced today by HM Revenue and Customs (HMRC) to the business record checks (BRC) regime.

Following a review involving the CIOT and other bodies, HMRC announced today that checks would be “more targeted in future, linking to available education and support.” BRC visits are to be scaled back while urgent work is done on setting up the new processes recommended in their review.

This follows strong representations from the CIOT over the past year over the flawed BRC pilot programme. After the programme was started prematurely, CIOT President Anthony Thomas and Director, Technical, Tina Riches, met with HMRC in April 2011 to raise a number of concerns about the mis-targeting of the scheme, the unnecessarily high bar being set by HMRC and the inadequate consultation process. This meeting led to further meetings involving other professional bodies and a review of the programme was announced in December.

CIOT President, Anthony Thomas, commented:

“HMRC are trying to have BRCs put firmly into the field of its compliance activity, which is where they belong. That will provide an incentive for taxpayers to pay more attention to record-keeping as well as removing grey areas for advisers and HMRC as to the status of BRC. All small businesses and their advisers need to be aware of the implications of BRC for matters like disclosure of inaccuracies and to be on the front foot when a BRC is announced.

“I welcome the recommendation that HMRC should consult with representative bodies to define clearly what constitutes ‘adequate’ records for the purposes of BRC. What counts as adequate records varies from business to business and a uniform approach will not work. The smaller business cannot be expected to have voluminous records written up every day: that is simply not appropriate.

“It is also encouraging to see that HMRC wish to work with the representative bodies to improve the record-keeping educational products available and to agree the point at which inadequate records become so severe that the customer needs to be subject to further compliance activity, with the potential for a full investigation. The CIOT is keen to work with HMRC in both these areas.

“Tax advisers are strongly supportive of efforts to improve record keeping by business, but up until now HMRC have been going about it the wrong way, endeavouring to eradicate error by increasing burdens disproportionately. A good programme to improve business record keeping will involve HMRC and tax advisers working together to educate business about good practice and support them in improving their systems, as well as warning about the risks of poor record-keeping.

“The review’s recommendations are promising, and I praise HMRC for taking a fresh look at this, although a lot of work will be needed to ensure we end up where we want to be. We have already met with HMRC to start this work.”

The CIOT’s Low Incomes Tax Reform Group (LITRG) has also been active in pressing for improvements to the BRC scheme.

Robin Williamson, Technical Director of LITRG, said:

“We welcome HMRC’s acceptance of LITRG’s recommendation that helping business with their record keeping obligations is as much an educational function as a compliance one. We are pleased that HMRC will work with LITRG and other voluntary sector bodies to ensure that good record keeping and other educational support is available to small unrepresented businesses.”

Notes to Editors

1. Further details of the CIOT’s concerns on BRCs can be found in the CIOT response to the original consultation at http://www.tax.org.uk/media_centre/LatestNews-migrated/BusinessRecordChecks

2. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.

The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT’s 15,600 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.


George Crozier
External Relations Manager

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