The suspension is over. HM Revenue & Customs (HMRC) has relaunched its Business Records Check (BRC) initiative today.
The purpose remains the same. HMRC intends to check the adequacy of business records being maintained by Small and Medium sized Enterprises (SMEs), but the process has changed.
HMRC now intends to:
Write to those SMEs selected for a BRC.
Telephone the selected SMEs to talk through their business record keeping. The call is expected to last 10 15 minutes.
Based on the responses received, HMRC will then:
Assess whether a face to face BRC visit is required.
If the business records are deemed to be adequate, the HMRC officer making the call will tell the SME and then confirm the decision in writing.
If the business records are deemed to require improvement, an HMRC officer from the Business Education and Support Team will make contact with the SME.
If the business records are deemed to be inadequate and a visit required, the HMRC officer will ask one of their colleagues on the booking team to call to make the arrangements.
This appears to be very similar to the traffic light system used by HMRC prior to the suspension. Adequate records were given the green light, records in need of improvement were given the amber light and inadequate records awarded a red light.
News courtesey of Abbey Tax Protection (unrelated to the poster) T: 0870 166 6270 E: sales@abbeytax.co.uk W: www.abbeytax.co.uk
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I believe the initial pilot, which ran from April 2011 to Feb 2012, was only in a few regions with fairly random selection of victims. The HMRC web site says "Up until 17 February 2012, 3,431 BRC had been carried out. These found that 36 per cent of businesses had some issue with their record-keeping of which 10 per cent had issues serious enough to warrant a follow up visit".
Now they have restarted HMRC have a new approach, customers (ha!) 'more likely to be at risk' will be contacted. I guess their views of who is more likely to be at risk of having poor records will be shaped by what they found in the pilot, plus maybe the various task forces looking at business sectors will have some influence - but that's just me guessing.
There's good info on the HMRC web site at http://www.hmrc.gov.uk/dealingwith/bus-record-checks.htm.
I think this has to be a brilliant marketing opportunity for anyone offering professional bookkeeping services, as the many thousands of businesses who struggle along on their own without help may now decide that it is time to outsource their record keeping to someone who knows what they're doing.
I think that HMRC's "hat" has blue sides and IBM written on the front.
iXBRL filing make it easy for HMRC's IT systems to churn out the businesses where year on year key ratio's are out of step with expected variances and these will be businesses that end up as first tier review candidates in the proverbial hat.
Actual follow ups will as always be restricted only by HMRC available manpower.
I don't believe that return on time is fed into the equation as to who will be followed up on.
There will continue to be a random element of some businesses that do not fail key ratio tests that are investigated.
Also, certain trades continue to be singled out for certain area's (solicitors in London, Restaurant owners almost everywhere, Online traders, Self employed tutors, etc.).
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think that HMRC's "hat" has blue sides and IBM written on the front.
iXBRL filing make it easy for HMRC's IT systems to churn out the businesses where year on year key ratio's are out of step with expected variances and these will be businesses that end up as first tier review candidates in the proverbial hat.
Actual follow ups will as always be restricted only by HMRC available manpower.
I don't believe that return on time is fed into the equation as to who will be followed up on.
There will continue to be a random element of some businesses that do not fail key ratio tests that are investigated.
Also, certain trades continue to be singled out for certain area's (solicitors in London, Restaurant owners almost everywhere, Online traders, Self employed tutors, etc.).
kind regards,
Shaun.
I'm sort of hoping where I work gets picked so they can tell me what a thoroughly good job I'm doing
I saw this yesterday too... plastered all over twitter no less...! lol I have started to warn clients off, and started posting to local communities warning off these 'direct sellers' (another 'take notice or else' post i put out yesterday...)
If they phone the client though, do you think they could get away with, 'please phone my bookkeeper he knows everything...?' Doesn't mention anywhere on the orders that this is the case?
Hey Stephen, maybe I can be more contentious still - perhaps they'd be better off only telephoning unrepresented taxpayers.
One of my bug-bears has been client's recording cash drawings. Often they do not know each week exactly what they drew (being the balance after lots of little cash expenses had been paid). However, the records are invariably there - simply not labled drawings each week, and, of course, there will be cash in various pockets hanging about and carried forward.
ADDED LATER Rightly they expect me to sort everything into date order and balance an imaginary cash box, but I only do this once a quarter or year. It is perceived as a major omission of "details of any money taken out of the business for your own or your family's personal use" but when they do try to record it, they can over or understate the amount, both of which look incriminating.
I'm sure you're right about the perceived risk. Also, they can infer things from the process of MLR (even if they do nothing with the reports themselves), especially how many reports have been filed by each agent.
Regards, Tim
-- Edited by Don Tax on Monday 5th of November 2012 01:10:38 PM
I saw this yesterday too... plastered all over twitter no less...! lol I have started to warn clients off, and started posting to local communities warning off these 'direct sellers' (another 'take notice or else' post i put out yesterday...)
If they phone the client though, do you think they could get away with, 'please phone my bookkeeper he knows everything...?' Doesn't mention anywhere on the orders that this is the case?
Hi Gary, re. Business Records Checks. I take the view that HMRC are more likely to find fault where the adviser is not present but, on the other hand, I wouldn't be surprised if it counts against the taxpayer to request to have the bookkeeper or accountant present, if only in the mind of the tax officer.
It must be tempting for them to exclude any advisers from the process, if possible. I like the analogy of 'direct sellers' and client's should be warned to contact us the minute any letter or phone call is received.
It doesn't seem long ago since HMRC themselves were telling us to be vigilant against fraudsters obtaining information for criminal gangs - and I wonder what the success would be of asking them to print out the questions and accept a written reply.
I think if the telephone interview reveals the 'customer' is using a professional external bookkeeper the risk rating will fall dramatically, and the chances of a visit correspondingly reduce. Perhaps another benefit of bookkeepers becoming members of a recognised body such as the ICB, might be that HMRC would hopefully see that as an indicator of quality and again reduce the risk compared to an unqualified bookkeeper? That's not to say there aren't some great bookkeepers and accountants out there qualified by experience, there are. But a recognised badge can perhaps better ward off the evil spirits?!
I think thats a cracking idea Stephen! Just having a badge to wear would make it worth while! But on a serious note it is a good idea, to be on some sort of HMRC register and then your client could quote this number/referance and HMRC could be like 'Oh well, thats ok; we will call them to varify that they are your accountant/bookkeeper' and that'll be that.
But on a side note I will email all my clients now and let them know that this is happening and what to do if they get a call. But one would assume that if they do randomly call people that they will check to see if a current 64-8 is held on the persons file... :/
Yes, a recognised badge, and the higher up the accountancy chain the better.
We have to be on guard for over zealous officials - I don't think they'd last long in the job if they were too trusting. There will be an inherent pressure for results because the checks are prompted from government being penniless.
The officer will probably have more training and experience in questioning than the client has in being questioned.
I also think HMRC will go for the low hanging fruit, and SME's who do their own books will be hanging pretty low. HMRC are very keen to target their resources these days.
I don't think many bookkeepers register as agents do they? If they're working to trial balance, the traditional preserve of bookkeeping, why would they need to? I guess they can however, and if they do accountancy work too I think they should of course.
All bookkeepers, qualified or not, have to register with HMRC for the purposes of the Money Laundering Regs - either directly or by virtue of belonging to a body such as the ICB. Though other than confirming they exist I'm not sure what info this register would give HMRC. Maybe a bookkeeper who is mentioned to them, but has failed to register for MLR, might actually increase the perceived risk as being someone prepared to ignore regulations (and hence cut corners)?! Or am I being too contentious?
I am and my assumption was that most of the other regulars are but I would stand to be corrected on that.
On the mentioned to HMRC but not registered for MLR I think that's a go straight to criminal charges against the bookkeeper isn't it?
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I am and my assumption was that most of the other regulars are but I would stand to be corrected on that.
On the mentioned to HMRC but not registered for MLR I think that's a go straight to criminal charges against the bookkeeper isn't it?
Your assumption is right here Shaun, it's one of the first things I did, I registered for both SA, and VAT for agents. I mean how do you expect to complete returns for people if you cant complete the online returns? (ok the paper ones, but online is MUCH easier)
Even calling HMRC up about your client need you to have a 64-8 on file for that client...
You're doing accounting work Gary, as well as bookkeeping, that's why you need to be registered as an agent. A bookkeeper wouldn't normally submit accounts or tax returns, they would prepare a trial balance for presentation to their client's accountant. In reality of course, most SME's just want a single professional to supply all their services. As well as that working well for bookkeepers when they have the knowledge and experience to do more than just bookkeeping, it's also why I take on work that includes bookkeeping, and then usually sub-contract it to a professional bookkeeper. That works well for the client, the bookkeeper, and me - I'm there not just to support the client but also the bookkeeper. OK, that's wandered off the BRC topic a bit!
I wonder if any bookkeepers who are not members of the ICB/AAT think that by registering as an agent they are also registered as Accountancy Service Providers for the purposes of the Money Laundering Regulations? As far as I can see the two are separate registrations, and a bookkeeper with just one client who does no accounts or tax work still needs to register with HMRC as an ASP.
Back to the original thread. My point was that clients will be being phoned up by HMRC, and will be telling them who does their books. I'm thinking HMRC might take the opportunity to check the status of the bookkeeper, and use the information to form a view on the client as well as possibly following up other clients of the same bookkeeper. The message has to be a)bookkeepers need to make sure they are registered ASP's (if they are ICB/AAT members they automatically are) and, perhaps more importantly, b) there is a real marketing opportunity for bookkeepers to use their professional membership as marketing tool to better effect than ever before. Every threat is also an opportunity!
Okay, enough of the discussion - here are some more facts:
The BRC programme will be rolled-out, region-by-region, over the following 14-week period;
London & East Anglia 26 November 2012 South East England 14 January 2013 Scotland 14 January 2013 Northern Ireland 14 January 2013 Central England 21 January 2013 East of England 28 January 2013 North Wales & the North West of England 28 January 2013 South Wales & the South West of England 4 February 2013
Patrick Stevens, president of the CIOT, said: Since the selection process for BRCs is based on risk assessment it is more likely that cash businesses will be chosen for BRCs. Such businesses in particular will need to ensure they are keeping adequate records going forward. Good point Patrick.
You're doing accounting work Gary, as well as bookkeeping, that's why you need to be registered as an agent. A bookkeeper wouldn't normally submit accounts or tax returns, they would prepare a trial balance for presentation to their client's accountant. In reality of course, most SME's just want a single professional to supply all their services. As well as that working well for bookkeepers when they have the knowledge and experience to do more than just bookkeeping, it's also why I take on work that includes bookkeeping, and then usually sub-contract it to a professional bookkeeper. That works well for the client, the bookkeeper, and me - I'm there not just to support the client but also the bookkeeper. OK, that's wandered off the BRC topic a bit!
Oh, this I never knew, i thought its was part of the role as a bookkeeper. I know i told IAB that i was doing this sort of work, so maybe i just underestimated myself and my role.
Thanks for posting those dates Stephen, looks like it'll be sooner rather than later for me regarding the checks then... 26th November! eek!
p.s. it's a part hidden one so you may have to join Aweb but it's free and safe (so long as you don't post over there then for the unprepared it's lions and Christians time). I think most us us old timers (myself, Kris, Tim, Bill, Mark, etc.) are members over there and I would advise everyone to join to keep abreast of the latest developments in our profession and regulation and tax matters.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
