Penalties for obstructing an HMRC inspection

Q: How much can the penalties be?

PenaltyAmountSource Initial penalty£300Paragraph 39(2) Daily penalty while obstruction continues after the initial penalty is imposedUp to £60 a dayParagraph 40 Tax related penaltySet by the Upper TribunalParagraph 50 In setting a daily rate, CH26680 tells officers to consider the tax that appears to be at stake, the nature and extent of the obstruction, the degree of cooperation so far and the person's compliance history, and says a rate at the lower end of the range will usually be enough for a first assessment. The tax related penalty in paragraph 50 also covers obstruction. It needs the obstruction to continue after the £300 penalty, an officer to have reason to believe that the tax paid or likely to be paid is significantly less as a result, and an application to the Upper Tribunal within 12 months of the relevant date. The tribunal sets the amount having regard to the tax not paid or not likely to be paid. The wider regime is covered in penalties for not complying with an information notice.

Q: How might this play out?

Illustration only. HMRC wants to look at the stock and tills of a retailer during a VAT check. The owner cancels two arranged visits without explanation. HMRC applies to the tribunal, which approves an inspection, and the owner receives a notice saying so and warning of the consequences of obstruction. On the day, the owner keeps the stock room locked, and HMRC assesses a £300 penalty. Two weeks later the owner still refuses access, so HMRC assesses daily penalties at £20 a day for the 14 days, a further £280. Had the owner been in hospital on the day of the visit, that would have been a strong reasonable excuse for the first refusal, provided the inspection was then allowed promptly on recovery.

Under paragraph 39 of Schedule 36 to Finance Act 2008, a person who deliberately obstructs an HMRC officer during an inspection that the tribunal has approved is liable to a £300 penalty, and paragraph 40 allows further penalties of up to £60 for each day the obstruction continues after that. The penalty only applies to tribunal approved inspections, it requires deliberate behaviour, and it is cancelled if you have a reasonable excuse.

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When does obstructing an inspection lead to a penalty?

Paragraph 39(1)(b) applies to a person who “deliberately obstructs an officer of Revenue and Customs in the course of an inspection under Part 2 of this Schedule that has been approved by the tribunal”. Three things must all be true:

It is a Schedule 36 inspection. Part 2 covers inspections of business premises (paragraph 10), the business premises of involved third parties (paragraph 10A), premises used for taxable supplies of goods (paragraph 11) and valuation inspections (paragraph 12A).
The tribunal approved it. Approval is given under paragraph 13. An ordinary arranged visit, or an unannounced visit made with only an authorised officer’s agreement, is not an approved inspection.
The obstruction is deliberate and happens during the inspection. HMRC’s guidance at CH26240 says the course of an inspection begins at the agreed date and time, or the date and time given in the notice, and ends when the officer says it has ended or when the time allowed by the tribunal runs out, whichever is earlier. An inspection does not end just because the officer leaves for lunch or at the end of the day with work unfinished.

How inspections are arranged is covered in HMRC inspections of business premises.

What counts as deliberate obstruction?

CH25700 describes deliberate obstruction as “knowingly and intentionally interfering with an officer exercising their right to inspect under the approval of the tribunal”. Its examples are:

denying access to premises and assets;
cancelling visits without reasonable excuse; and
continued distraction to stop the officer completing the inspection.

CH26240 adds a two part test. The person must be aware that the officer is carrying out a tribunal approved inspection, and must prevent the officer from doing something they reasonably and legitimately need to do to complete it. The same page says there is no penalty where the obstruction is not deliberate, giving the example of a person who is taken ill.

Two points often surprise people. First, the occupier keeps the right to refuse entry. CH25650 says this right “cannot be overridden”, even where the tribunal has approved the inspection, so HMRC cannot force its way in. Refusing entry to an approved inspection is, however, the first of HMRC’s examples of obstruction, so it is the penalty that does the work rather than any power to break in. Second, asking an officer to show their authority is not obstruction. For valuation inspections, paragraph 12B(7) requires the officer to produce evidence of authority if the occupier or person in charge asks.

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Why does tribunal approval make the difference?

Refusing or frustrating an inspection that has not been approved does not trigger a paragraph 39 penalty. HMRC’s response, set out in CH25650, is usually to discuss the case with a manager or authorised officer and consider asking the tribunal to approve the inspection, putting before the tribunal any reasons the occupier gave for refusing entry. CH25540 says officers should normally seek approval where they expect, or have already met, objection.

For a business premises inspection the tribunal must be satisfied that an authorised officer made or agreed the application and that the inspection is justified (paragraph 13(2)). Applications can be made without notice, and the tribunal’s decision is final (paragraph 13(3)). Once approved, the written notice given to the occupier must state the possible consequences of obstructing the officer and that the inspection has been approved (paragraphs 12(4) and 12(5), and paragraphs 12B(5) and 12B(6) for valuation inspections). The approval process itself is explained in tribunal approval of HMRC information notices.

How much can the penalties be?

Penalty	Amount	Source
Initial penalty	£300	Paragraph 39(2)
Daily penalty while obstruction continues after the initial penalty is imposed	Up to £60 a day	Paragraph 40
Tax related penalty	Set by the Upper Tribunal	Paragraph 50

In setting a daily rate, CH26680 tells officers to consider the tax that appears to be at stake, the nature and extent of the obstruction, the degree of cooperation so far and the person’s compliance history, and says a rate at the lower end of the range will usually be enough for a first assessment.

The tax related penalty in paragraph 50 also covers obstruction. It needs the obstruction to continue after the £300 penalty, an officer to have reason to believe that the tax paid or likely to be paid is significantly less as a result, and an application to the Upper Tribunal within 12 months of the relevant date. The tribunal sets the amount having regard to the tax not paid or not likely to be paid. The wider regime is covered in penalties for not complying with an information notice.

What counts as a reasonable excuse?

Paragraph 45 removes liability to the £300 and daily penalties if you satisfy HMRC, or the tribunal on appeal, that you had a reasonable excuse for the obstruction. The statute rules out two things: a shortage of funds, unless caused by events outside your control, and relying on someone else, unless you took reasonable care yourself. If the excuse ends, the obstruction must stop without unreasonable delay.

HMRC’s guidance at CH26360 gives bereavement and serious illness around the relevant time as excuses it will normally accept, and CC/FS3 gives serious illness, the death of someone close and documents lost in a fire or flood as examples. CH26400 lists things HMRC will not normally accept on their own, including a lack of understanding, pressure of work and HMRC not sending a reminder. General principles are in our page on HMRC reasonable excuse.

Can obstruction become a criminal matter?

The criminal offences in Part 8 of Schedule 36 are about documents, not inspections. Paragraph 53 makes it an offence to conceal, destroy or dispose of a document required by a tribunal approved information notice, and paragraph 54 covers doing so after being told in writing that HMRC intends to seek approval for a notice covering it. On conviction on indictment the maximum is two years’ imprisonment, a fine or both (paragraph 55).

Separately, section 31 of the Commissioners for Revenue and Customs Act 2005 makes it a summary offence to obstruct an officer of Revenue and Customs, or a person assisting one, without reasonable excuse. The Compliance Handbook’s inspection guidance deals with obstruction through the civil penalties described above. Paragraph 52 of Schedule 36 prevents a penalty being charged for anything for which a person has been convicted of an offence.

Who charges the penalty and how do you challenge it?

HMRC assesses the penalty and must notify you (paragraph 46). An assessment of the £300 or daily penalty must be made within 12 months of the date you became liable. Where the Valuation Office Agency carried out the inspection, CH256300 says the HMRC caseworker makes a submission to an authorised officer for agreement to the £300 penalty and is responsible for issuing the penalty and handling any appeal.

You can appeal against the decision that a penalty is payable and against its amount (paragraph 47). The appeal must be in writing to HMRC, state the grounds and be made within 30 days of the date the penalty notification was issued (paragraph 48). On appeal the tribunal can confirm or cancel the decision, or substitute a different amount. What you cannot do in a penalty appeal is reopen the approval itself: CH25540 says there is no right of appeal against a tribunal decision to approve an inspection, and any challenge would be by judicial review. Unless you appeal, the penalty is payable within 30 days of notification (paragraph 49).

How might this play out?

Illustration only. HMRC wants to look at the stock and tills of a retailer during a VAT check. The owner cancels two arranged visits without explanation. HMRC applies to the tribunal, which approves an inspection, and the owner receives a notice saying so and warning of the consequences of obstruction. On the day, the owner keeps the stock room locked, and HMRC assesses a £300 penalty. Two weeks later the owner still refuses access, so HMRC assesses daily penalties at £20 a day for the 14 days, a further £280. Had the owner been in hospital on the day of the visit, that would have been a strong reasonable excuse for the first refusal, provided the inspection was then allowed promptly on recovery.

What mistakes do people make?

Assuming the right to refuse entry means there is no consequence. It means HMRC cannot force entry, not that refusal is free once the tribunal has approved the inspection.
Treating every inspection notice the same. Read it: the approval wording is what brings paragraph 39 into play.
Delaying tactics, such as repeated cancellations or constant interruptions, which HMRC lists as obstruction.
Waiting until the penalty stage to argue that the inspection was unjustified, when the approval decision is final.

For an overview of the information notice powers that often accompany inspections, see our guide to Schedule 36 information notices.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.