As in the past, compliance checks for PAYE/NICs and VAT will normally be carried out by visiting the business premises.
In the case of most small and medium-sized businesses (SMEs), HMRC expect that compliance checks will be carried out most frequently by asking for documents and information to be sent to an HMRC office. They would normally expect compliance checks to be made by way of a visit to the business premises only if it is convenient for the officer and the taxpayer to see the business records at the business premises, or if it is necessary to:-
HMRC’s Risk and Intelligence teams select taxpayers who are to be visited by Local Compliance officers. Large Business Service (LBS) have always carried out visits to the large business they deal with and they will continue to make their own selections.
Before carrying out a visit to business premises as part of a compliance check, the risk should have been identified and a note made of why it is best addressed by way of a visit instead of calling for documents and information. The timing of the visit should be reasonable and the officer must be able to show that the compliance check is reasonable and proportionate so that the conditions of Art. 8(2) of the European Convention o Human Rights (ECHR) are satisfied.
If the taxpayer has a good reason why the officer should not visit their business premises, this should be made known to the officer. This might be due to lack of space, disruption caused to the operation of the business or the adverse effect on customers. The officer can then arrange to see the business records at an HMRC office or the premises of the practitioner if they accept that there is good reason not to visit the business premises.
Officers are reminded that:-
‘Managers are ultimately responsible for ensuring that visits are reasonably required and proportionate to the risk and that inspection powers are used in a way that minimises disruption and interference with taxpayers’ right to privacy.’
The taxpayer will always be handed a Fact Sheet on visits explaining their rights and responsibilities.