IFAs likely to be targeted by HMRC

IFAs likely to be targeted by HMRC

According to a senior tax expert, HM Revenue & Customs will be targeting Independent Financial Advisers who deal with their own book keeping, among other small businesses who do their own accounts. A senior partner at Baker Tilly, George Bull believes that the HMRC inspectors who are carrying out the Business Record Checks will be looking for ‘quick wins’ among businesses. He also warns that HMRC view; ‘failure to take reasonable care’ as a serious offence.

The Business Record Checks scheme is being launched to target small businesses who keep inaccurate or incomplete business records which according to HMRC, accounts for £4 billion lost tax each year. This figure is the same as tax lost through evasion and avoidance.

HMRC announced that the number of checks carried out would be 20,000 a year, rather than the 50,000 originally planned. According to Bull, if 120 tax inspectors work 220 days a year in pairs, they would have to carry out 1.5 visits a day. This makes it more likely that the inspectors will look for easy targets.

A consultation paper which was published in December 2010, outlined the trial of the scheme. The report revealed that 44 percent of businesses checked had inaccurate or incomplete records, and 12 percent of businesses had ‘serious’ problems with their records.

A business which does have serious problems with their records could face a fine of up to £3000. According to Bull, this could be due to offences like updating records on an infrequent basis or receipts not being recorded, resulting in large penalties.