Examining Accounts: Records Examination - Planning: At the Business Premises
There are advantages and disadvantages to examining the records at the business premises. The factors you should consider are
- you can talk to the people who are actually responsible for keeping the records. They can explain the system, answer specific questions and help with difficulties in mastering what has gone on. This applies as well to reviewing a computer system at the business premises. Under no circumstances however should you operate the system in any way yourself, even if invited to do so. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- you can see exactly what you want, including current records, foundation documents, and non-financial records. You should ensure that the accountant and directors will make available any records which they retain such as nominal or private ledgers.
- that if the records are of any size, it will simply not be practical to have them delivered to the office.
- the understanding of the limitations of the accounting system and its true relationship to the business activities will be greatly enhanced through working in the actual physical surroundings.
- there may be distractions which are not present in the office. Useful as it can be to talk to the proprietor, staff and accountant about the business and the accounting system on the premises, their constant presence may interrupt and distract you from your task.
- you will feel more constrained by time. You can only spend so long on the business premises. This makes the need for thorough planning before the visit all the more important.
- the physical conditions in which the job has to be done may in themselves make it difficult. There may be insufficient space, tables or chairs or the proprietor may be deliberately making your life difficult. If so, you will have to consider taking whatever you need back to the office. There is more information and guidance on unreasonable working conditions at CH840200.
Some of the disadvantages of examining records at the premises can be overcome if two officers go together. Although this doubles the resource cost of any visit, there are considerable advantages.
- in the unlikely event of violence, whether actual or threatened, two officers are in a less vulnerable position than one. (You should withdraw straightaway.)
- two people can get through more work than one. Comparison of items such as despatch notes with invoices can be accomplished far more quickly if two people call them over. Moreover, by having someone there to talk over problems, you are more likely to arrive at solutions than were you working independently.
- it may be easier for one person to concentrate on examining the records if a colleague is available to deal with any interruptions or to carry out any inspections of the business premises that are required.
- if any attempt is made to destroy documents after the examination, there is the evidence of what two HMRC officials saw to put before the tribunal. Similarly, if there is any later dispute about what took place during the visit, a second official can corroborate or correct the recollection of his or her colleague.
Exactly who should go will depend upon the nature of the case and the resources available. Trainees may gain valuable experience from accompanying colleagues on such visits but the help they can give may be less than that which an experienced enquiry officer can offer.
Guidance on your inspection powers at business premises is at CH25000+.