Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: business records checks: penalties: penalties for inadequate record-keeping

Section 12B(5) TMA 1970 and Para 23(1), Schedule 18 FA 1998 allow us to charge a penalty where the customer has not met their record keeping obligations. This means a penalty can be charged when a customer’s statutory records are not adequate.

Where, at the follow up visit, a penalty position is confirmed, you must use the following tariff to calculate the penalty due.

Penalties will apply on a ‘flat rate’ basis as follows:

  Initial failure to keep or preserve statutory records £500
     
  Initial failure in the first tax year of business trading £250

These penalties will be increased for subsequent failures by adding £500 to the ‘Initial failure to keep or preserve statutory records’ rate for each occasion a failure occurs, to a maximum of £3,000. So a second failure will attract a penalty of £1,000 no matter if the initial failure was in the first year of business trading.

  Deliberate destruction of all statutory records £3,000
     
  Deliberate destruction of some statutory records £1,500

These penalties are to be applied when records have been destroyed with the intention of hindering HMRC’s compliance checking. They must not be applied if penalty action is being taken under Schedule 36 FA 2008 for obstruction or destruction of records.

Where a penalty for inadequate records is due, you can apply your discretion to vary the standard penalty or the length of the Business Records Check (BRC) when:

  • exceptional circumstances beyond the customer’s control have prevented the customer from demonstrating sustained behavioural change, or
  • applying the standard penalty at the 3 month point would give a result contrary to the compliance intention of sustained behavioural change.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) BRC Authorised Officer (This content has been withheld because of exemptions in the Freedom of Information Act 2000)