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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: business records checks: at the visit: the re-visit and 24 month review

At the end of the agreed period, you should re-visit the business to check if the records have been changed and maintained over that time.

If the record-keeping for that period is adequate, see COG941125 you must not seek a penalty. This is regardless of the degree of inadequacy of the records which preceded that period. There will be evidence of sustained behavioural change and so no need for a penalty.

Only where record-keeping for that extended period continues to be inadequate will HMRC consider the position to be serious. In these circumstances you must charge a record-keeping penalty.

You need to explain to the customer what steps they must take to improve their records for the current year. This is to enable them to make as accurate a return as possible under the circumstances (accepting that the earlier records were inadequate and cannot be changed).

You, with your manager’s approval, also need to consider whether a referral for a ‘tax check’ is required.

You must write to the customer within 10 working days of the date of the re-visit to advise them of the outcome. You should send a copy of the letter to the authorised agent, if appropriate. Make sure you close the case on both Caseflow and MIS systems.

24 months review

All customers who are subject to an ‘extended’ Business Records Check (BRC) visit will be selected for a second BRC check 24 months after the date the first BRC visit is completed.

Those customers who showed behavioural change at the first BRC visit will be contacted by Compliance Centres. They will go through the BRC process, with the potential for a further visit if there is again a high risk of inadequate records. Those customers who were subject to a penalty will automatically receive a second BRC visit.

If this second visit identifies inadequate records, HMRC will consider the inadequacy to be serious, because the customer has not taken the opportunity offered to put things right following the first visit. You must assess a penalty at this point, having regard to the tariff for subsequent record-keeping failures at COG941840. There will be no need to extend the BRC visit.