An officer will examine the statutory records as part of their preparation for carrying out a compliance check.  The aim of the examination will be to establish how the system is said to operate and how it operates in practice.  In this way the officer will be able to assess the risk of tax not being accounted for correctly.

For compliance checks on businesses the officer will consider what records they want to see.  This will depend on whether they intend to carry out:

  • A post-return check – when they will want to examine the records for the period covered by the return; or
  • A pre-return check – when they will want to examine the current records.

 

The officer will consider the likely business activities and the possible sources of income.  This will enable them to decide what records they want to see and to check if they capture all the information needed to make a complete and correct tax return.  The officer can check the statutory records at the business premises.

Where records do not relate to a business, HMRC can only ask to see them after the end of the tax year.   Non-business records only become statutory records after the end of the tax year they relate to – they are usually things like interest certificates that are provided after the end of the year.  The officer cannot inspect non-business records at the taxpayer’s private residence.

HMRC have the power to check computer systems although they must not operate the computer themselves, download any applications or remove the computer.  They can, however, call on expert assistance from HMRC’s resources such as Data Handling Specialist or the Large Business Service (LBS) Audit Service to help them with their examination of electronic records.

While generally a printed copy of a document held electronically may be accepted as sufficient by HMRC, they can make a written request for the production of the original electronic document or an electronic copy.

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