CH217100 - How to do a compliance check: Records: Penalties for Failure to Keep Records: Introduction

When you carry out a compliance check you may find that the person has failed to keep or retain records. In some circumstances it is possible for you to charge a penalty for the person’s failure.

The extent of the person’s failure may range from a failure to keep records that would ensure that a tax return is correct in every respect to the deliberate destruction of records that were the subject of an information notice. Whatever action you decide to take should be proportionate and appropriate to the person’s behaviour.

If, on starting your check of a business that is run by a person on their own, you find that the person has died after a period of illness, you should take this factor into account when considering record keeping standards. Penalties for keeping inadequate records will not be appropriate.

For checks involving PAYE/NICs and CIS there are no penalties for failure to keep or retain records.

For checks involving IT, CT and CGT you should follow guidance at EM4650 and, for claims not included in a return, at SACM4020. You should make a note on CESA or COTAX of any warnings you issue.

For checks involving VAT you should follow the guidance at V1-24B sections 5, 6 and 10 and at VCP11133. You should make a note on EF of any warnings you issue.