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HM Revenue & Customs are to continue with their pilot scheme, Business Record Checks in an attempt at closing the tax gap. The number of tax officers who carry out the record checks will increase from 30 to 120, with a further 12000 business checks before April 2012.

The record checks are being concentrated on Small and Medium Enterprises for now, but if the pilot is successful it may be rolled out nationally. HMRC insist that accurate business records result in the correct amount of tax being paid, in a timely manner. During the initial checks on record keeping, the scheme found 44 percent had problems with their records, with a further 12 percent having ‘seriously inadequate’ records. According to HMRC, penalties will only be charged if a business demonstrates serious deficiencies with keeping records. However, the most serious offenders will face penalties of up to £3000. The director of local compliance for HMRC, Richard Summersgill said:

“Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success. And where a check has shown a business keeps adequate records, it gives HMRC a greater degree of assurance as to the likely accuracy of its tax returns.”

By offering support to businesses, and monitoring the accuracy of records HMRC hopes to increase the accuracy of tax returns and close the tax gap. The number of business record checks initially planned for 2012-13 is 20,000. A final decision will be made in 2012 whether to roll out the scheme nationally.

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