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HMRC internal manual

Compliance Handbook

How to do a compliance check: establishing the facts: covert surveillance: overview

Covert surveillance must be agreed by an authorised officer.

Research using the Internet and social media is sometimes covert surveillance. 

A Directed Surveillance Authority (DSA) under the Regulation of Investigatory Powers Act (RIPA) is required if you are likely to obtain private information during covert surveillance.

What covert surveillance means

When covert surveillance can be used during a compliance check

Directed surveillance under RIPA

Conditions that must be met

What can be done during non-RIPA authorised covert surveillance

Authorisation and reporting requirements

Advice available

What covert surveillance means{#meaning}

You carry out covert surveillance when you monitor, observe and record the activities of a person to gather information in such a way that the person you are observing is unaware that you are doing so. 

You carry out covert surveillance when you carry out test purchases and test eats.

If you use the internet to monitor a customer over a period of time, you are doing covert surveillance.

When covert surveillance can be used during a compliance check{#when}

The use of covert surveillance is limited to certain circumstances because it interferes with a person’s right to privacy, which is protected by Article 8 of the Human Rights Act 1998 (HRA). This right applies to businesses as well as people. You can find out more about the HRA in CH21300.

You can use covert surveillance for the purpose of establishing a person’s tax liability using the powers provided by the Commissioners of Revenue and Customs Act 2005 if:

  • it is necessary for the purpose of establishing a person’s tax liability 
  • you do not record any private information.

Private information is anything to do with a person’s private or personal relationship with others, including family and professional or business relationships.

You must not carry out surveillance at anyone’s home.  

Directed surveillance under RIPA{#directed}

If covert surveillance is likely to result in the obtaining of private information about the subject of the compliance check or any other person, it is ‘directed surveillance’ which must be authorised under procedures set out in the Regulation of Investigatory Powers Act 2000 (RIPA). Only trained and authorised FIS Civil caseworkers can carry out directed surveillance during a compliance check.

Conditions that must be met{#conditions}

If you intend to use covert surveillance, you must demonstrate that

  • it’s both necessary and proportionate to address an identified risk
  • the information cannot be obtained in a less intrusive way.

For example, you may need to monitor and record business activities where there is a risk of under-declaration of cash takings.

What can be done during non-RIPA authorised covert surveillance{#nonripa}

You can observe and record:

  • cash handling procedures
  • numbers of customers or covers in a restaurant
  • how customers pay
  • numbers of employees
  • details of purchases made by you or other customers.

You must not:

  • record details of

             - physical descriptions of taxpayers or their employees or customers

             - personal conversations 

  • ask anyone for information or engage them in conversation.

Authorisation and reporting requirements{#authorisation}

Directed surveillance must be agreed by an authorising officer which will be arranged by Central Authorities Bureau (CAB) in the Fraud Investigation Service following the guidance in CH207530.

Covert surveillance that is not directed surveillance must be agreed by an authorised officer and reported to the ISBC Covert Activity SPoC following the guidance in CH207530.    

It’s not necessary to have authorisation to walk or drive by business premises to simply check that a business is operating there as long as you do this only once.

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(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)