HMRC is targeting businesses they believe might be at risk of not having adequate records. They say that this is a process which randomly picks out small-medium sized entities and if your business comes up on the list, HMRC will firstly conduct a telephone interview to find out what records you are keeping, and the process may stop there if they are satisfied you are keeping good records.
Telephone interview? – Don’t panic!
HMRC will not publish the questions which are likely to be asked during the telephone interview. However, from our vast experience in dealing with Business Record Checks it has been possible to put together a list of questions that you are likely to be asked. There does seem to be some variation in the questioning, and that this is not to be taken as a comprehensive list. We recommend that you seek professional assistance before placing reliance on any of the below.
- On a scale of one to nine, where one is ‘not at all’ and nine means ‘completely’, to what extent do you understand your obligations to HMRC?
- On a scale of one to nine, where one means ‘never’ and nine means ‘always’, to what extent do you need help understanding HMRC forms?
- How long have you been in business?
- How many business payments do you take in a month?
- Of those, how many are in cash?
- How often do you write up your business payments?
- How many business purchases do you make in a month?
- Of those, how many are in cash?
- How often do you write up your business purchases?
- Can you tell from your record keeping which transactions are for business purposes and which are personal?
What happens after the questions?
Depending on what responses are given to the questions, the HMRC representative will advise immediately whether or not you have been selected for a visit. Alternatively they might give you details of further ‘education’ courses or, finally, there might be no further action.
What happens during the visit?
If HMRC thinks you need a bit of help, they may contact you again via their Business Education and Support Team. Alternatively, they may decide to look further and visit your business.
During the visit the HMRC officer will:
- ask you to explain how you run your business
- note how you keep your business records
- check a sample of your current business records – usually your records for the last four months – and arrive at a decision as to whether your business records are adequate or not
Be ready for a Business Records Check
The simplest approach is to keep adequate business records and ensure your bookkeeping is up to date and your payroll and VAT affairs are in good order.
For further advise or to arrange a free consultation, contact Livingstones Accountants on (020) 8903 9538.
Written by: Anuj Shah
anuj@livingstonesaccountants.co.uk
(020) 8903 9538
