The inspection powers do not permit HMRC to inspect premises that are used solely as a dwelling (see FA 2008, Sch. 36, para. 10 (2)). This will not prevent the inspection of any part of the premises that is used for business purposes, including:-
HMRC acknowledge that a home cannot be inspected if business records are simply stored there because there is no other place to keep them, and there are no business activities or business assets at the home. Nor will they treat a home as business premises if work that is normally done at the office is occasionally done there in the evening or at weekends.
However, any home in respect of which an adjustment is made in the accounts for ‘business use of home’ can be inspected using HMRC’s inspection powers, although the inspection must not extend to any part that is used solely as a dwelling.
It should be remembered that the occupier has a right to privacy under the Human Rights Act 1998 and can refuse entry. However, if the inspection visit has been approved by the Tribunal, the occupier will be liable for a penalty for obstructing the visit if they refuse entry, although the officer is only permitted to inspect that part of the premises that is used for the business.
There is no right of appeal against an inspection visit. If the Tribunal has approved the visit and the occupier refuses entry on the grounds that the Tribunal could not have been satisfied that the inspection was justified, any challenge to the approval would have to be by way of judicial review.
HMRC instructs their officers that inspection of a person’s home should be avoided wherever possible unless they are invited there by the taxpayer.