HMRC has increased its rate of checks on businesses, says insurance firm PfP.
Since the 2011/12 period, checks on businesses across the country have risen by 60% from 3,431 to 5,515 during the 2013/14 period.
The business records checks process was criticised in the past by numerous business and accountancy bodies leading it to be placed under review in 2012, before operations resumed towards the end of the year.
Business records checks are used to highlight businesses which have inaccurate and inadequate records, and resultantly pay the incorrect amount of tax. Businesses can face penalties of £3000 if they are found to be lacking in their record keeping and owe HMRC money.
PfP’s study found that the number of businesses which had ‘nothing significantly wrong’ with their records and data had jumped to 73% from the previous rate of 64%. This suggests that businesses have been more compliant in their operations amid more stringent tax rules and compliance checks.
Kevin Igoe from PfP commented: “After the review HMRC said it would try to reduce the burden on compliant businesses by using a more targeted approach. However, the majority of those being reviewed are finding that their business records are sufficient.”
A HMRC spokesperson said that the business records checks were intended to distinguish low-risk businesses from the high-risk ones that needed further monitoring. However, the evidence of increased checks pointed out that the programme had not been toned down as the review intended, and that HMRC’s strategy in trying to achieve this was not “as effective as hoped.”
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