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Business records check programme ‘under review’

HMRC is to carry out a review of its business records checks programme after the initiative was criticised by business groups and MPs.

The tax authority intends to carry out checks on up to 20,000 small businesses during 2012/13, following a pilot of the scheme last year.

But HMRC has recently revealed that it will conduct a ‘strategic review of the project’, amid increasing pressure from the business community and other bodies.

The move is likely to be welcomed by the Federation of Small Businesses (FSB), which was amongst the groups that had voiced concerns over the programme.

‘Despite the worsening economy, HMRC is launching this scheme regardless of the consequences,’ said FSB chairman, John Walker.

‘We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen. There is a huge difference between the rhetoric of the government about helping small businesses and what it is doing in reality.’

Under the scheme, HMRC officers conduct checks on the adequacy of the records kept by small and medium-sized enterprises, with the aim of improving standards of record-keeping and reducing the amount of underpaid tax.

The taxman has the ability to levy fines of up to £3,000 where a firm is found to have ‘inadequate’ records.

A Revenue spokesperson said: ‘HMRC recognises that the launch of the business records checks pilots has caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage.

‘In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies.’