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HMRC internal manual

Compliance Handbook

How to do a compliance check: using FA08/Sch36 inspection powers: establishing and recording the need for a visit

The considerations below should be taken into account and recorded in the case file for all compliance checks involving an inspection visit.

The decision and record may be made by a Risk Team or other case selection team, by a manager or team leader, by an officer, or by a combination of the above.

The considerations must include

* the risk or risks identified
* the objectives of the inspection
* the type of visit required (by prior agreement, by formal notice or unannounced, see CH252000)
* why the check can’t be done effectively without visiting the business premises, for example by examining records at the agent’s or HMRC’s premises
* the time of the visit, which must be reasonable, see CH25460 
* how the conditions of Article 8(2) of the Human Rights Act are satisfied in terms of the compliance check being reasonable and proportionate in the circumstances, see [CH21380](
* whether to carry out the visit alone or accompanied by one or more colleagues, see COG11450.

If the inspection is to be done at a person’s home, the agreement of a manager should be obtained.

If an unannounced inspection is considered necessary, or there is doubt about whether a person’s home is being used in connection with the carrying on of a business, the prior agreement of an authorised officer is required, see CH254020 and CH25200.

If, during a compliance check that has not already been referred for a visit by a risk team or your manager, you consider that an inspection is necessary to address an identified risk, you should discuss the case with your manager or team leader.

Where a person is running two or more businesses which are independent from one another you should only inspect the premises, assets and records for the business that is the subject of the compliance check. If risks relating to an associated business are identified, you will have to give at least 7 days’ notice of an inspection unless the person agrees to letting you inspect there and then.

Extra issues requiring consideration may arise where serviced offices are to be visited. Where the person operates from serviced offices, notice of the visit must be given to the serviced office provider. Where the person is the owner or operator of the serviced office, the visit should not interfere with those who are using the office.

Managers are ultimately responsible for ensuring that inspections are reasonably required and proportionate to the risk and that inspection powers are used in a way that minimises disruption and interference with person’s right to privacy.