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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: business records checks: at the visit: informing customer of inadequate records

Where you consider that the records are inadequate, you must explain to the customer

  • why you consider the records to be inadequate
  • how the business might remedy the position going forward - this will include discussion and agreement with the agent, if appropriate
  • that the record-keeping failures mean that a penalty has been incurred and could be charged
  • that the penalty can be reduced to nil if the customer makes appropriate changes to the records to make them adequate and sustains those changes over an agreed period of time
  • after that extended period, you will return to check that the changes have been made and sustained throughout the period.

You should seek to agree with the customer or their agent at the meeting, the date from which the record keeping changes will be introduced. Typically, this date will be within a few days of your visit. Occasionally it may be more reasonable to bring them into effect from the beginning of the next calendar month, for instance if a change to a computer system is needed. A full 3 months is to be allowed from the date of change, when arranging the follow up visit.

The Business Records Check will then be extended to give the customer a period (typically 3 months) to demonstrate behaviour change. A longer period may be required, depending on the nature of the business and any exceptional circumstances. However, you should be wary of extending the visit unnecessarily and causing unnecessary burden to the business.

For example, a seaside bed and breakfast may not be open in the winter. If the visit takes place at the end of the season, a 3 month period would not be appropriate as the business could not demonstrate sustained behavioural change.

You must write to the customer using the BRC5 (Outcome of Visit) letter, available in SEES, within 10 working days of the date of the visit and advise them of the points covered above. If possible you should also agree a date for re-visit. A copy of the letter should be sent to an authorised agent, if appropriate.