Contractors' Questions: Is it up to me to deal with a Business Records Check?

Contractor’s Question: Is it me, my limited company or my accountant that is responsible if I’m selected for a Business Records Check? And if I do receive a visit from HM Revenue & Customs, which taxes are covered in the records check; is it up to the HMRC officer or what is says under the relevant piece of tax legislation?

Expert’s Answer: As a contractor, you are responsible for maintaining accurate records for all things for your accounts. HMRC’s Business Record Checks (BRC) programme imposes penalties for significant record-keeping failures relating to Income Tax, Corporation Tax and VAT. It applies to the self-employed, sole traders, contractors, freelancers and businesses with a turnover of less than €50m (£40m) and with less than 250 employees.

HMRC’s previous BRC programme was poorly implemented and all BRC activity was halted from February – October 2012 to allow HMRC time to carry out a strategic review. This review is complete and the new BRC approach commenced on November 1st 2012, so you could be about to get a call.

HMRC’s first contact will be by letter and will ask taxpayers to complete a short questionnaire over the phone with HMRC. Depending on the outcome of this call, HMRC will confirm whether any issues have been identified and some taxpayers will be offered targeted self-help options. Taxpayers who are identified of being at risk of keeping inadequate records will be referred for a BRC visit

No new legislation was necessary for the introduction of the business records checks as HMRC use existing legislation regarding both record keeping requirements and penalties for failure to comply with those requirements – it is your responsibility.

Most accountants including ourselves will deal with all correspondence with HMRC so you don’t have to and will ensure your records are accurate and up-to-date.

The expert was Martin McKechnie, a director at the Low Tax Group, a specialist accountant for contractors and one-person businesses.

Editor's Note: Related Reading -

Contractors' Questions: What if I fail my duties as a limited company director?

Your limited company: its structure and status

Contractors' Questions: Do I need a contract with my limited company?

Wednesday 14th Nov 2012