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HMRC internal manual

Compliance Handbook

How to do a compliance check: using inspection powers: inspections at a person’s home: examples of when they may be needed

Examples of circumstances where it may be necessary and reasonable to conduct an inspection at a person’s home are

  • where stock is kept at home
  • in the case of an outworker - the stock or assets kept at their home may be inspected. The person should be given an opportunity to make the items available for inspection elsewhere if this is practical
  • at a farm - the office, fields, barns and areas involved in business activity can be visited. The private areas of the farm house and private garden cannot be visited without invitation
  • in a pub - the cellar, bar, commercial kitchen, store rooms and any vacant rooms which are let can be visited. The private living accommodation cannot be visited without invitation
  • shops with flats above - the commercial premises, including offices and store rooms, can be visited at retail and wholesale sites. Any separate premises used solely as a private dwelling, for example a flat above the shop premises, cannot be visited without invitation
  • guest houses/hotels - the bedrooms, areas available for guest use, kitchens used to prepare guest meals, store rooms and offices can be visited. Any private areas of the guest house, staff bedrooms and occupied guest bedrooms cannot be visited without invitation
  • surgeries - the offices and waiting rooms can be visited as can any consulting rooms not in use
  • where it is appropriate to physically check that the proportion of household expenses claimed as a tax deduction is reasonable
  • where there is evidence that a home is used for a business and that business has not been notified to HMRC
  • where there is evidence that the business connected with the premises is being misrepresented to HMRC.

For example

  1. a person with no discrete business premises reporting a large turnover and claiming substantial VAT repayments. HMRC need to verify the volume of trade passing through the address to check that the repayments are valid
  2. a person with a large turnover in high value commodities but no discrete premises and no stock
  3. a mobile telephone number offering services, such as betting tips/personal services/horoscopes, is registered to a private home. HMRC need to call to establish the nature of business being operated from that address.

Specific guidance about valuation inspections is at CH25380 and CH256000.