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HMRC internal manual

Compliance Handbook

How to do a compliance check: using inspection powers: invigilation: when and how to use invigilation

When to use invigilation

An invigilation is an inspection and the same rules apply:

  • You can only enter premises to carry out an invigilation after an inspection has been arranged or authorised.
  • The invigilation must be carried out within the framework for either an announced or unannounced inspection, see CH25420.

The information to be obtained must be required to check the tax position or liability to duty of a business.

Invigilation may be undertaken when

  • you have evidence or a reasonable suspicion of undeclared or misdeclared sales
  • it is not possible to rely on the records kept by the trader to quantify the amount of unpaid tax.

Invigilation must not be used as a credibility check before you have reasonable grounds for suspicion that sales have been suppressed. For further guidance on using invigilation and the powers to invigilate, see CH258300.

How to use invigilation

The general principle of invigilation is to quantify the takings figure by monitoring sales over a representative period of time for comparison with declared takings in previous periods.

If the declarations show significantly

  • different levels of sales, or
  • different proportions of cash sales or standard rated sales

then the ratio established during invigilation in the representative period can be used to calculate the correct sales and VAT output tax figures.

Direct monitoring can be achieved by attending a customer’s business premises during the hours of trading and observing the number and level of transactions taking place.