Seldom completely easy, the relationship between business and HM Revenue & Customs (HMRC) could be about to get a whole lot worse. Many SMEs will already feel that the current tax compliance and red tape put enough strain on their often limited resources. However, the organisation responsible for maximising the Government’s income is about to roll out its Business Records Check Scheme - currently being  piloted in Edinburgh and other locations across the UK.  This scheme steps up the pressure on firms with a newly recruited army of inspectors visiting businesses to review real time records to ensure they are in good order and compliant.

Rather than waiting until tax returns are submitted the inspectors can now demand immediate access to records and, if deemed incomplete, levy penalties. These tactics appear to me as nothing more than an aggressive and slightly desperate exercise to generate tax revenue for the Exchequer. 

The feedback on this scheme coming from the Edinburgh business community is that he HMRC’s tactics are disproportionate, overbearing and worst of all, taking their focus away from important company business which they can scarcely afford in this current climate.

While we all agree that small businesses need to make their fair contribution through the tax system and maintain proper records of their financial position, the HMRC seems to be applying more regulation at a time when companies least need it.

For those who are unfortunate enough to be selected, HMRC will send a letter advising that a visit is imminent - in some cases as little as two weeks notice is given - and will request that records are to be made available.  Of course, all being well HMRC will have no further queries following the visit.  However, if there are any areas of enquiry this could lead to increased burdens for business owners, possibly additional professional fees and yet more time spent away from running business in meetings and discussions. These tactics are the equivalent of ‘audit lite’, and amount to a presumption of guilt against many SMEs which are the backbone of the UK’s economy.

These tactics from HMRC seem to go against the Coalition Government's aim of lessening the administrative burden on companies. It could prove counter-productive to business, hindering their ability to succeed and ultimately lower the revenues the Government seems so desperate to collect.

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