YOU HAVE BEEN WARNED!!
BUSINESS RECORDS CHECKS BY HMRC
On 1 November 2012, HMRC started a ‘new approach to Business
Records Checks’ (BRCs). The target audience of these checks are small businesses; yes, that means YOU - self-employed drivers.
A BRC is a check by The Revenue that the records of a business are adequate to allow a taxpayer to submit an accurate or proper tax return. The Revenue thinks that a lot of small businesses are making mistakes which are overall costing them big money. HMRC sees BRCs as a bolt- ing of the stable door, whilst the horse is still in it!!
12 DEPOSIT TO PAY £499
49 54
DEPOSIT TO PAY £540 ADEQUATE BOOKS AND RECORDS?
This is one of the difficulties. Unfortunately there is no exact answer to this question. For most sole traders, the following would be regarded as “adequate” records: • a record of all sales and takings, including cash receipts. For example sales invoices, bank statements, and paying-in slips;
• a record of all purchases and expenses, including cash purchases. For example purchase invoices, receipts, bank and credit card state- ments, and cheque book stubs
WHY YOU?
HMRC select a number of self-employed traders based on their view of businesses which are more likely to be at risk of having inadequate records. The criterion it chooses is not known but, guess which trade is most likely to be up there with the market traders and entertainers: yes the good old private hire / taxi driver.
WHAT IS INVOLVED IN A BUSINESS RECORDS CHECK?
After the selection process the following may happen. • HMRC will contact you by letter, telling you that you have been select- ed for a Business Records Check and they will get in touch, normally by phone, within a few days.
• In the phone call, they will ask approximately 15 questions about your business records to help them determine if they are adequate.
• They will then either: (i) Assess whether you are likely to be able to submit an accurate tax return from your records. No further action …job done.
OR; (ii) Feel you could do with some “additional help and support” to put your records in order. The HMRC's Business Education and Support Team will subsequently contact you;
OR!! (iii) Decide you are a risk and are keeping inadequate records. Then you get a face to face visit. in which case they will state that you need a face to face visit.
WHAT SHOULD YOU DO IF YOU RECEIVE THE LETTER ABOUT BRC? - DON’T PANIC.
• Contact your accountant, he will advise you as to whether it is better if he contacts HMRC on your behalf.
• Deal with the phone call yourself, then do so but if as a result of the call, HMRC state that you need a face to face visit please contact your accountant before the visit. He will be able to attend the meeting to ensure that the HMRC officer comes to a reasonable conclusion.
Do not take these phone calls or visit lightly, you can get a penalty if they don’t like your records (usually £500). the HMRC are also more likely to open an enquiry into you if they don’t like your records.
Ask you accountant for a proper system or weekly reporting sheets and keep the HMRC wolf from your door this winter.
Gary Jacobs Drivertax 020 8529 2600
www.drivertax.co.uk
PAGE 36 PHTM JANUARY 2013
FREE CREDIT CHECK
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