HMRC Business Record Checks

HMRC has announced that they are to launch a programme of Business Record Checks (BRCs) for small and medium enterprises (SMEs) during 2011. They are plan to check the records of 50,000 SMEs each year for four years.
They expect to raise an additional £600m in revenue from this exercise. This equates to £3,000 on average for every business reviewed, although HMRC claim they will not be seeking to raise penalties in every case. It is interesting to note that the current maxium penalty for failing to keep records for income tax or corporation tax is £3,000 (additional penalties can apply for VAT).
It seems likely that if you are selected for a BRC check that it will cover your business tax, VAT and PAYE at the same time for an in year check. If any apparant errors or shortcomings are identified , it is likely that enquires into previous years will be opened.
It is not yet clear whether businesses will be selected for BRCs at random or by some kind of risk assessment.
If your records do not accurately reflect every transaction, can you afford to leave it?
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