HMRC has been accused of defying the Government's own attempts to reduce red tape by ramping up its business record checks.

The checks, which will affect 20,000 small and medium-sized businesses in 2012/13, are adding to the red-tape that is already throttling businesses, the Forum of Private Business (FPB) claims.

According to the FPB, HMRC's SME strategy warns of an increase in 'potential rule breakers' between now and 2015, estimating that 28 per cent of SMEs could be found to have poor records. Failure to produce adequate records could result in fines of up to £3,000.

But rather than fines, these businesses, that are already facing difficult trading conditions, should be offered better advice, guidance and support, the FPB claims.

Commenting, the Forum's chief executive Phil Orford said: "Small businesses want to keep proper records but struggle with the significant administrative barriers that exist in the UK. They also want to pay their tax bills on time but the reality is that many firms are struggling with cash flow in extremely tough economic conditions - yet HMRC is being completely inflexible.

"Entrepreneurs are crying out for a better tax regime that supports their ambitions and is conducive to growth, not one that provides constant hurdles to overcome and punishes them disproportionately.

"Operating such a strict, punitive small business records checks regime while effectively allowing large companies to do as they please is completely unfair."

The FPB is not the only organisation to criticise HMRC's actions, particularly following the recent revelations that large corporations have had their tax bills reduced by millions.