The Chartered Institute of Taxation (CIoT) has welcomed HM Revenue and Custom’s decision to scrap the controversial business record checks (BRC), stating the move is a “victory for common sense”.
The BRC programme meant contractors and other flexible workers were penalised if they kept inadequate paperwork relating to income tax and VAT, with those suspected receiving a letter from HMRC and a phone call about their records.
Despite running a record number of checks last year, around three-quarters of those targeted actually had adequate records despite efforts by the tax authority to identify high-risk individuals and businesses.
HMRC said BRC had encouraged more businesses to improve their record keeping but admitted that it had contacted “more compliant customers than expected”, as it had proved more difficult than previously thought to select those who “would benefit from a visit”
The CIoT believes it is the right decision to end the scheme, as it was not cost effective and had been poorly implemented for a number of years due to it being trialled, suspended and revamped on two occasions.
CIoT spokesperson Andrew Gotch said: “Pulling the plug on business record checks is certainly the right decision. A lot of public money and businesses’ time has been wasted.”
Despite HMRC’s common sense approach to scrapping business record checks, Mr Gotch said it was essential that contractors do not become complacent about paperwork and continue to keep good records, especially with digital tax accounts on the horizon.
Self-employed individuals currently engaged with HMRC regarding BRC must still complete the phone questionnaire.