Books and records checks

The general starting point, is that businesses must keep records sufficient to make an accurate return. HMRC is entitled to check if the records kept do in fact show an accurate account of the businesses income and expenditure.


Not every business keeps records sufficiently detailed to satisfy HMRC that the returns are accurate.

This problem is made much worse if HMRC officers carried out covert operation. For example, at your restaurant and, having made a test purchase, the sale slip is not recorded in the sales day book.

The Check

Businesses must keep records to fill in their tax returns correctly and pay the right tax, at the right time to avoid interest and penalties.

If HMRC decides to look at your business records they will usually contact you by letter. You must keep business records to fill in your tax returns correctly and pay the right amount of tax, at the right time to avoid interest and penalties.

When HMRC contacts you by letter

HMRC will write to you and ask you to telephone them to discuss your records. When you phone, they will ask questions to help them work out if you are keeping the business records you need to meet your legal responsibilities. The telephone call should take between 10 and 15 minutes.

From the replies you give, the HMRC officer:

  • Will assess whether you are likely to be able to submit an accurate tax return from your records
  • Will tell you during the call and will confirm it in writing, if no further action will be taken at this stage
  • May feel you could do with some additional help and support – If so, they will tell you during the call
  • May decide you are at risk of keeping inadequate records, in which case you would need a face to face visit – they will tell you this during the call
  • May pass your details to the visiting booking team who will contact you to arrange a suitable date and time for the visit

When HMRC visits your business

If HMRC thinks you need a face to face visit, an officer will contact you to agree a date and time. The duration of the visit will depend upon the size and nature of your business. It is extremely helpful to have a professional adviser present to assist you during this visit.

During the visit, the HMRC officer will:

  • Ask you to explain how you run your business
  • Note how you keep your business records
  • Check a sample of your current business records – usually for the last 4 months
  • Arrive at a decision about whether your business records are adequate or not

If your records are adequate, the visiting officer will tell you during the visit and then confirm it in writing a few days later. This will be the end of your business records check.

If the visiting officer finds your record keeping needs improving, they will discuss this with you The officer will advise what you need to do to make your records adequate and what will happen next.

If you are facing a books and records check do not leave anything to chance. Talk to the experts at Taxation-Investigation today to make sure that your business is compliant.