Technical Briefings
05 August 2010
Forewarned is forearmed – would you know what to do if HM Revenue & Customs turned up at your premises unannounced?
Are you aware that HMRC now have the power to send one of their officers to enter a person’s business premises and inspect the following:
- The premises;
- Any business assets on the premises or;
- Any business documents on the premises if the inspection is reasonably required to check the tax position of that person.
What would you do if this were to happen to you? Read on to find out more.
HMRC new inspection powers
In the past a visit by a Revenue officer has been a regular feature of a VAT or PAYE investigation but such visits have not been a traditional part of the conventional income tax or corporation tax enquiry case. The position is however likely to change.
Agreed inspections
In many cases an informal request will be made to carry out the inspection. It will be normal practice to telephone beforehand and then a formal notice is issued to confirm:
- The date, time and place of the visit
- The name of the visiting officer(s)
- Which records they would like to see
Seven day notice inspections
There are inspections carried out at a ‘reasonable time’ when at least seven days notice either in writing or otherwise has been given.
Unannounced visits
These are visits carried out in more serious cases with the agreement of an authorised officer of HMRC. These visits should only be made where there is a clear operational need to avoid giving advance notice and the intrusion and potential inconvenience is justified to achieve HMRC’s aims.
What will happen at an unannounced visit?
It is a legal requirement that the officer must provide a notice in writing as follows:
- To the occupier if they are present
- To the person who appears to be in charge if the occupier is not present
- In any other case, by leaving the notice in a prominent place on the premises.
The notice must set out the consequences of obstructing an officer and it must also state whether the inspection is one which has been approved by a tribunal.
Tribunal approval
HMRC can go to Tribunal to obtain approval for any type of visit. The application is made without any right of representation on behalf of the person whose tax position is being checked and it must be made by an authorised officer. Approval may only be given if the tribunal is satisfied that the inspection is justified. HMRC guidance suggests that an approach to a tribunal will only be made where entry has been refused on an unannounced visit or where it is anticipated that entry will be refused.
Practical issues
It would be wise to have a contingency plan in place should you have an unannounced visit. A plan should be drawn up and all key personnel in the business should be advised of the procedure to follow in case HMRC turn up when the proprietors are away from the premises. The plan should include:
- What to tell the officer
- Who to contact
- What other action to take
The officer should provide formal identity and an official visit notice. If there is any doubt as to the officer’s identity, you should contact the tax office concerned to confirm that a visit has been authorised by a tribunal.
If you decide that the visit can go ahead it is important to try and buy some time to get everything ready that the officer has asked to see. Ask for half an hour or so to do this and in that time contact your accountant for advice.
There is no right of appeal to a tribunal to have a visit cancelled and a judicial review in the high court is the only legal option that can be pursued.
Penalties can be charged where a person ‘deliberately obstructs an officer of HMRC in the course of an inspection that has been approved by a tribunal’. The initial penalty is £300 but further daily penalties of up to £60 per day can be imposed if the obstruction continues.
If you are in any doubt as to the rights of an inspecting officer or your obligations in the event of a visit then please contact any Wilkins Kennedy office for further advice.