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HMRC internal manual

Enquiry Manual

Examining Accounts: Computer Generated Records: What documents and systems we can legally examine

You are entitled to examine any “relevant documents” that are held as data on a computer system or a data storage device, provided that they are reasonably required to check a persons tax position. You are also able to copy these documents or take extracts from them.

You are not however entitled to demand access to a taxpayer’s computer system in order to obtain or examine the data or documents that are stored on it. You must always ask the person who has been authorised by the management of the business to operate the computer in such a way that it will allow you to examine the data or documents you need. The management may include a director, the owner or the IT or accounts manager.

Under some circumstances it may be necessary to inspect and check the operation of a computer and any associated apparatus or material that has been used in connection with a relevant document. For example, in order to establish if the relevant data or a document is accurate, we may need to check how a computer system was set up to produce it and how changing certain system settings would have affected the data or document. Before considering this type of computer check you must make sure that it is both proportionate and reasonably required.

Only Authorised Persons are entitled to carry out this type of computer check. An Authorised Person for this purpose is someone who has received appropriate training in the examination of computer systems, see CH218400. An Authorised Person can be either an HMRC officer who has received the appropriate training or a specialist consultant engaged by HMRC.

Authorised Persons have the power under FA08/S114 to require the person who is entitled to operate the equipment to provide them with any reasonable assistance they need to carry out their computer check. Any request for assistance should be proportionate to the scope of the planned audit and should not impose an undue burden on the taxpayer or the person involved in the operation of the computer.

If the person fails to comply they are liable to a penalty of £300. The Authorised Person is not however entitled to operate the equipment without the permission of the person who owns it. If the Authorised Person is given permission they must ensure that the owner or the person authorised by the management of the business to operate the equipment is fully aware and agrees to any intended system changes. As soon as the computer check is completed, these changes must be fully reversed.

If the person refuses to provide you with the relevant computer records or data, or refuses to allow an authorised officer to check the operation of a computer, during an authorised inspection, see CH25000, we can copy the data on the computer and if necessary remove it, in the same way we can copy or remove any other relevant document, see CH25320. Under these circumstances the inspection notice should be approved by a tribunal, see CH25540.

If the owner has refused to provide us with the relevant documents, and we have had to remove it, there may be no alternative but to operate the computer in order to copy the data. The computer must only be operated by an Authorised Person. Again, if it is necessary to make any system changes these must kept to the absolute minimum that is required and be fully reversed either immediately after the data or document have been copied, or before the computer is returned to the business.