How to do a compliance check: using inspection powers: covert activity: overview
What is covert activity?
If you gather information from inside or outside a customer’s business premises without identifying yourself to the customer as an HMRC caseworker, you will be carrying out covert activity.
Examples of covert activity
Examples of covert activity include:
- test purchases, where you enter the business premises and buy goods
- test eats, where you enter the business premises to record numbers of customers, or observe how the business handles cash
- where you are outside the business premises recording the number of customers entering and leaving
- where you observe business premises from another premises
without identifying yourself to the business.
These examples are not exclusive and there may be other types of covert activity you wish to carry out.
When can I carry out covert activity?
There are strict rules covering when you can and cannot carry out covert activity.
- The information must be required to check the tax position or liability to duty of a business.
- You must be able to show that the information you require cannot be obtained using civil information or inspection powers.
- The covert activity must be reasonable and proportionate to the underlying need, see CH257600 and CH21360.
- You must have agreement from an authorised officer, see CH257400.
You must also consider whether you need to apply for a Directed Surveillance Authority under the Regulation of Investigatory Powers Act (RIPA) 2000, see CH257500.
For further guidance on the legal basis of HMRC’s covert activity, see CH257300.