Following the issue of a report reviewing BRC, HMRC have announced a fresh approach to the above programme in 2012.

BRC are aimed at being short, face-to-face, real time interventions to encourage greater voluntary compliance in record keeping among small and medium business enterprises. HMRC estimate that 40% of SME taxpayers are not keeping adequate records and that this can lead to inaccurate tax returns. The pilot programme plans to carry out around 6,000 BRCs in 2011/12.

The BRC programme is part of HMRC's reinvestment plans for the current Spending Review period. Following a public consultation exercise from December 2010 to February 2011, testing of the concept began in 8 locations in April 2011 and expanded coverage began in September 2011, expanding to a full complement of 120 full-time staff by November 2011.

BRC are a key part of HMRC's ‘customer-centric’ strategy and are aimed at SMEs who are in the ‘willing but need help’ or ‘potential rule-breaker’ segments. They look to address the failure to take reasonable care behaviours which lead to errors and inaccuracies in tax returns. Whilst HMRC offers a range of educational support on record keeping, BRCs are the only face-to-face intervention specifically aimed at the failure to take reasonable care behaviours and they provide compliance coverage in the SME population where there might otherwise be none.

The pilot programme of BRC began in April last year and involved checks by HMRC on the standard of small and medium-sized enterprises’ statutory business records. Up until 4 January 2012, 2,437 business records checks had been carried out. These found that in HMRC's opinion 28% of those businesses visited had some issue with their record keeping, and an additional 11% had issues serious enough to warrant a follow-up visit.

HMRC will now postpone making any new business records check appointments until the revamped approach outlined in the report is launched early in the 2012/13 financial year. This is intended to allow further consultation on the implementation of the recommendations in the review and on some details of the new approach. In the interim, HMRC will only undertake visits already booked, as well as follow-up visits to businesses that have already been identified as having seriously inadequate statutory records.

The review report on the BRC programme is available at http://www.hmrc.gov.uk/businessrecordscheck/review.pdf