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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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How to do a compliance check: using inspection powers: covert activity: power to carry out covert activity

Covert activity can be carried out using Section 5 and Section 9 of the Commissioners of Revenue and Customs Act (CRCA) 2005. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The power to carry out covert activity during a compliance check is not covered by either Schedule 36 Finance Act 2008, or The Customs and Excise Management Act (CEMA).

When can I use CRCA 2005 to carry out covert activity?

Before carrying out any covert activity you must have agreement from an authorised officer, see CH257400.

Covert activity must always be a last resort. For covert activity to be necessary you must:

  • have identified a risk in relation to a business’s tax position or duty liability
  • require the information to check the tax position or liability to duty of a business
  • be able to show that the required information cannot be obtained using information or inspection powers under Sch36 FA08 or CEMA

Covert activity must be reasonable and proportionate to the underlying need, see CH257600 and CH21360.

You should treat information about the way a business operates as private information for the purposes of Article 8, Human Rights Act (HRA), see CH21340. You must only carry out covert activity in relation to the business premises to minimise the risk of collecting private information not required for the purpose of the compliance check.

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.

Inappropriate covert activity

You must not use:

  • covert activity as a credibility check to decide whether to carry out a compliance check.
  • covert activity where private information may be obtained, including where the business is carried out at a person’s home.
  • Closed Circuit Television (CCTV) or cameras to covertly gather information during a compliance check.