The taxman’s approach to small business records checks has undergone a “subtle change in tone” from being an educational exercise to a compliance check.

HM Revenue & Customs recently said “business records checks are primarily a compliance check, not an educational exercise”.

However, this is not what was originally being sold to advisors. Letters sent to businesses as part of a pilot by HMRC recommended areas of improvement for record keeping and informed companies that they might receive visits within three months to check the improvements have been made.

Up until now, the theme had been one of informed education but that now seems to have changed with HMRC now calling it a compliance check.

HMRC responded to the change by saying “a policy of not charging a penalty for an initial finding of significant record keeping failure would risk creating the perception that there is no need to change behavior in relation to poor record keeping unless and until one has been caught out at least once.”

A fair argument but some are saying that the Taxman “jumped the gun” on the pilots. “The summary of responses said the pilot scheme began on 4 April but the first letter was sent out on 21 March. They jumped the gun. The original consultation said it would start in the second half of 2011.”