HMRC Compliance Checks FAQ

Inspection Powers

30. Is it true that VAT officers can no longer visit homes?

Homes which have no business use cannot be visited without permission from the customer. Where a home is the VAT registered address it may have business use but, as before, an officer of HMRC cannot insist on inspecting at someone’s home unless there is a real need to do so.

31. Is it true that unannounced visits have been given up?

No. Where the risk merits an unannounced visit this can be done. The visit must be authorised by an authorised officer.

31. Do the new powers apply to excise/environmental taxes/other taxes?

No. There is ongoing consultation about extending the framework but no decisions have been made. This is a matter for Ministers to decide.

33. Is there a right of appeal against the power to inspect?

No. But the law says that an inspection must be reasonable. Guidance includes examples where an inspection would or would not be reasonable. If HMRC breached this guidance, the taxpayer could either make a formal complaint, or could refuse to allow the inspection to take place. A penalty for obstructing an inspection can only be charged where the first-tier Tribunal has approved the inspection. HMRC must demonstrate to the Tribunal the inspection is reasonable before approval is given.

34. Is the power to inspect new?

Not for VAT and employer compliance. It is new for Income Tax, Capital Gains Tax and Corporation Tax It should help speed up checks by avoiding protracted correspondence. Seeing the business can provide an officer of HMRC with a better commercial perspective and a more complete picture of records, assets and business activities.

35. Can visits be made without being arranged in advance?

Yes, but these need to be approved by an authorised officer or the first-tier Tribunal.

36. How much notice of a visit is required?

At least seven days but in most cases a period of three or four weeks is more likely so that a convenient time can be found. This has always been the practice with the exception of VAT – visits where repayment claims have been queried by HMRC before payment has been made. These can still take place earlier than seven days with the customer’s agreement.

37. What is an officer entitled to do at a visit?

An officer can enter business premises and examine statutory records, inspect the premises and business assets. They cannot search, rummage or wander around unaccompanied without the taxpayer’s consent. They can only look at documents beyond the statutory records if the taxpayer agrees or they are produced in response to an information notice.

38. Can HMRC still visit homes?

HMRC will not be able to visit homes that are not used for business purposes without the taxpayer’s consent except in criminal investigation cases. For taxes not covered by these changes the current provisions continue.

HMRC can only visit homes used for business purposes if there is a clear reason why this is necessary.

39. How will HMRC decide what is private?

In most cases it will be clear whether premises are business or private. Some examples are provided in the guidance.

40. How will the decision on what is reasonable be arrived at?

HMRC staff will be required to ensure any action taken is:

  • appropriate to the circumstances
  • does not infringe a person’s rights under the Human Rights Act
  • consistent with the requirements of the Data Protection Act

All the relevant operational staff must successfully complete the training before they can exercise these powers.

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