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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: business records checks: critical definitions: inspecting statutory business records under Sch36 FA 2008

What does the legislation allow?

The processes and procedures for Business Records Checks (BRCs) are governed by the following legislation.

Paragraph 10 Schedule 36 Finance Act 2008 allows HMRC to inspect statutory business records at the business premises.

Paragraph 64 Schedule 36 Finance Act 2008 allows HMRC to check the past, present or future tax position of a person. The provision that gives authority to check a future tax position means that HMRC can carry out checks in-year, before a return is submitted.

The formal powers under this legislation should only be engaged if you are undertaking a visit that has not been agreed. See CH207200 for details on an informal approach to compliance checks.

Officers who carry out compliance checks using the informal approach must understand, and act within, the legal framework of Schedule 36 Finance Act 2008.

Business records not held at the business premises

Although the legislation in Schedule 36 Finance Act 2008 only allows HMRC to inspect the statutory business records on the business premises, there may be occasions when the customer or agent suggests an alternative location for the inspection, see COG940725.

What are statutory records for BRC purposes

The legislation defines statutory records at Paragraph 62(1)(a) Schedule 36 Finance Act 2008. This states that a statutory record is a record that is required to be kept by virtue of the Taxes Acts.

For direct taxes, the basic statutory record keeping requirements can be found at:

  • Section 12B Taxes Management Act 1970
  • Paragraph 21 Schedule 18 Finance Act 1998

Business Records Checks only consider the statutory business records by these two Acts.

However, Visiting Officers should be aware that there are additional record-keeping requirements for businesses that are registered for VAT, for those with employees and for those within the Construction Industry Scheme.