HMRC has now scrapped the Business Record Checks for UK Contractors meaning that they will no longer have to complete checks by tax inspectors. The Charted Institute of Taxation (CIOT) said this decision was “a victory for common sense”, as Business Record Checks had previously been criticised for being ineffective and badly targeted as a means of ensuring contractors were submitting the correct amount for their tax returns.
The Charted Institute of Taxation does acknowledge that in order for businesses to keep good records the key is to educating new and standing businesses about good practices rather than fining them once they have become non-compliant.
Although evidence suggests that most small businesses in the UK are keeping records to an appropriate level, HMRC are tackling this with their online learning packages to help improve further.
Along with the CIOT, the Association of Taxation Technicians among others have been involved in discussions with HMRC over the business record checks future, group Chairman, Anthony Thomas states, “Pulling the plug on Business Record Checks is certainly the right decision”.
However, scrapping the Business Record Checks does not mean that HMRC are going to become relaxed on tax compliance with small businesses, who need to keep up to a good standard of record keeping. This in line with HMRC’s idea of bringing in digital tax accounts, meaning businesses may need to submit data more frequently.
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