Pictured: Iain Macleod

Following news that HM Revenue & Customs(HMRC) will scale up its Business Records Check programme, EDF Tax asks if new staff have received enhanced trained and are inspection-ready to properly scrutinise the business records of 12,000 firms before 5 April 2012.

A former tax inspector for 26 years and now head of Tax Investigations at EDF Tax, Iain Macleod says: "Although HMRC usually takes training very seriously, there is always a worry when a small pilot is scaled up. Those involved in the pilot will have been committed to the project and probably will have had enhanced training. Can HMRC ensure that the new staff coming into the Business Records work have the same levels of knowledge and understanding? Will they be given increased targets and workload? It's really important HMRC gets this right as what is proposed is pretty intrusive."

In its pilot programme, HMRC identified that 44% of business records reviewed were inadequate. It now believes that the tax returns of up to 2 million small and medium businesses could be wrong because of poor records. 12,000 businesses will be inspected in the first tranche, followed by a further 20,000 visits next year. If successful, it is expected that these numbers will continue to ratchet up.

"HMRC is expected to bring in the right tax," continues Ian. "If businesses aren't recording their income and expenditure accurately, they can expect HMRC to come along and advise on improvements. Any tax and interest due, maybe for four or more years, will be collected and penalties might arise too. There are separate penalties for keeping poor records, but HMRC won't be using that power just yet.

"It makes sense for businesses to do a health check before the tax man calls. And if you know you have underpaid tax in the past, it is always best to tell HMRC to try and resolve things as painlessly as possible."