BRC Coming to a Place Near You

Business Records Check (BRC) to be re-launched

Back in April 2011 HMRC embarked on a pilot programme of BRC. This involved checks by HMRC on the adequacy of Small and Medium-sized Enterprises' (SMEs) statutory business records. SMEs being defined as businesses with an annual turnover below £30 million who employ less than 250 people.

Up until 17 February 2012, 3,431 BRC had been carried out. Of these, it was discovered that 36% of businesses had some issue with their record-keeping of which 10% had issues serious enough to warrant a follow up visit.

In February of this year, HMRC announced a revised approach to the BRC programme which was the result of a review of the pilot that included discussions with trade and professional bodies. The review concluded that the programme was effective in improving SME's record-keeping but recommended that checks should be better targeted.

The programme was put on hold between 3rd February – 31st October to allow HMRC to redesign the BRC process. A new approach to BRC then commenced on 1st November although checks will not start in earnest until 26th November when HMRC will begin carrying out record checks of SME's in London and East Anglia. BRC's will then continue for 14 weeks on a region-by-region basis as follows:

14th January 2013: 
South East England, Northern Ireland and Scotland

21st January 2013: 
Central England

28th January 2013: 
East of England, North Wales and North West of England

4th February 2013: 
South Wales and South West of England

Those businesses that HMRC deem more likely to be keeping inadequate records will be contacted by letter to arrange for HMRC to call them to go through a short questionnaire. Depending on the outcome of that call, HMRC will then either confirm that no further action is necessary or, where some issues are identified, offer the business self-help education options and decide whether a BRC visit is necessary.

Where a business needs to improve its record-keeping, HMRC will arrange a follow up visit, usually within 3 months of the initial visit and if there has been no improvement a penalty of £500 will be imposed. For businesses in their first year of trading the penalty is £250.

Patrick Stevens, president of the Chartered Institute of Taxation, said: “Since the selection process for BRC's is based on risk assessment it is more likely that cash businesses will be chosen for BRC's.”