By Simon Vincent, Senior Accountant at Hive Business.

Many of you will know that HMRC often launch routine investigations into tax-payer’s affairs; you may even have been on the receiving end of such enquiries. What you may not know is that HMRC can (and do) arrange to visit clients premises to inspect records and they don’t even have to warn you in advance.

Unannounced visits from HMRC are an increasingly common reality and by all accounts, they are generally unpleasant. You can perhaps see the reasoning behind HMRC having these powers. If you’re in the wrong and know HMRC are planning to visit, you’ll have plenty of time to hide any evidence. If you repeatedly miss appointments then they’ll turn up knowing you’re not expecting them. Indeed, officially, this is why these powers exist.

Unofficially, however, it’s a different story. HMRC arrive on your door wearing their hi-vis jackets, showing their shiny badges (which incidentally look like police badges) and waving around their inspection notice (conveniently looking like a search warrant). Obviously, this isn’t designed to intimidate or mislead you into believing you have to comply but evidence suggests this is the exact result.

The fact is, any business is at risk from such a visit by HMRC. No matter the type or size of your business, HMRC may arrive at your door without notice.

What should you do if they turn up at your doorstep?

First and foremost, they do have to follow certain rules:

• HMRC need to show ID, their inspection notice and a factsheet;
• They are only allowed to visit business premises, and only during reasonable hours (our emphasis added);
• They are not allowed to force entry, conduct a search, interview staff or inspect any cash.

Furthermore, you don’t have to let them in but there can be penalties for not doing so without “reasonable excuse”. HMRC need to make you aware that you can call your tax agent (e.g. Hive Business) and they shouldn’t come in until we are present (this will always be a “reasonable excuse”) so, first and foremost, call us – to the extent of being rude and leaving them on the doorstep if you need to – they rely on human politeness to gain access in such surprise circumstances. Anecdotally, chances are that if you don’t let them in they’ll simply go away. They can then apply to the tribunal for permission to return, but they tend not to pursue this (take from that what you will…).

This is yet another unfortunate example of HMRC assuming tax payers are guilty until proven innocent. Hardly in line with their charter.

If you need to get in touch to discuss an investigation call us on 01872 300232.