Businesses are required by law to keep sufficient records to complete their tax returns accurately. They must also retain certain records for the period prescribed by legislation.
HMRC have the power to carry out checks to ensure businesses are meeting their record-keeping requirements. However, these are being wound down from October 2015 and HMRC will no longer initiate new business records checks. However, they will complete the telephone questionnaire where the initial letter has been sent out and visit the business if necessary.
Guidance on business record checks is available on the gov.uk website at www.gov.uk/record-keeping-checks-on-your-business, and has recently been updated. It covers the procedure followed by HMRC when checking records, the format of a records check visit and the possible outcomes of a visit.