Guidance on Inspecting Business Premises of Involved Third Parties for Tax Compliance

Revenue Scotland inspections of third-party business premises for Scottish Landfill Tax

Revenue Scotland can inspect the business premises of a third party involved in a Scottish Landfill Tax disposal where this is reasonably required to check a devolved tax position. The power can extend beyond the taxpayer’s own site, but it is limited to business premises, business assets and relevant documents connected with the taxable disposal, and it does not allow entry into parts used only as a home.

• An “involved third party” means a person or business involved in the taxable disposal in any capacity, not just the taxpayer.
• Revenue Scotland may inspect the premises, business assets on the premises, and documents there that relate to the taxable disposal.
• The inspection must be reasonably required to check the tax position, so Revenue Scotland must be able to justify why it is needed.
• The power can still be used even if Revenue Scotland does not yet know the identity of the person, or all the persons, whose tax position is being checked.
• Any part of the property used solely as a dwelling is outside the inspection power, although a business area within a home may still be inspected.

Scroll down for the full analysis.

Revenue Scotland inspections of an involved third party’s business premises

This page explains when Revenue Scotland can inspect the business premises of a third party who is involved in a Scottish Landfill Tax taxable disposal. The rule matters because the inspection power is not limited to the taxpayer’s own premises. In some cases, Revenue Scotland can inspect the premises, assets and documents of another business if that is reasonably required to check a devolved tax position.

What this rule is about

The source material deals with an investigatory power under the Revenue Scotland and Tax Powers Act 2014. It applies where Revenue Scotland needs to check the tax position of a person, or a group of persons, in relation to a devolved tax.

In this particular guidance, the focus is on an “involved third party” in relation to Scottish Landfill Tax. The guidance says that an involved third party is any person involved, in any capacity, with a taxable disposal as defined in section 3(2) of the Landfill Tax (Scotland) Act 2014.

So the issue is not whether the third party is the taxpayer. The issue is whether that person or business is sufficiently connected with the taxable disposal and whether inspection of their business premises is reasonably required to check the tax position.

What the official source says

Revenue Scotland says it may enter the business premises of an involved third party and inspect:

• the premises themselves,
• the business assets on those premises, and
• relevant documents on those premises.

The guidance says this power can be used where the inspection is reasonably required for checking the position of any person or class of persons regarding a devolved tax.

For Scottish Landfill Tax, the relevant documents are documents relating to the taxable disposal.

The guidance also makes two important limits and extensions clear:

• Revenue Scotland may use the power even if it does not yet know the identity of the person whose tax position is being checked, or the identities of all the persons concerned.
• Revenue Scotland cannot enter or inspect any part of the premises used solely as a dwelling. But if a business is run from a home, it may inspect the business part, subject to that restriction.

The source cites section 142 of the Revenue Scotland and Tax Powers Act 2014 and the Revenue Scotland and Tax Powers Act (Involved Third Party) Order 2015.

What this means in practice

This is a targeted inspection power. It allows Revenue Scotland to look beyond the taxpayer’s own site if another business is involved in the taxable disposal and holds evidence that may help establish the correct tax position.

In practice, that could matter where records, assets or operational evidence relevant to a landfill tax disposal are held by a contractor, site operator, intermediary, transport business, or another participant in the chain. The guidance does not limit “involved” to one specific role. It uses broad language: involved “in any capacity”.

However, the power is not unlimited. The inspection must be reasonably required. That introduces a legal standard. Revenue Scotland must be able to justify why entry and inspection of those business premises is needed for checking the devolved tax position.

The inspection can cover more than paperwork. It can include looking at the premises and business assets on the premises. That may matter where the physical setup, equipment, stock, waste handling arrangements, or other on-site features are relevant to whether taxable disposals took place and how they should be treated.

The documents that may be inspected must be relevant documents. In this guidance, that means documents relating to the taxable disposal. So the connection between the document and the disposal is important.

How to analyse it

If you are trying to work out whether this power may apply, the main questions are:

• Is there a devolved tax issue that Revenue Scotland is checking?
• Is the third party involved, in any capacity, with the taxable disposal for Scottish Landfill Tax?
• Are the premises business premises?
• Is the proposed inspection reasonably required to check the tax position?
• What exactly is Revenue Scotland seeking to inspect: the premises, business assets, documents, or all three?
• If documents are involved, do they relate to the taxable disposal?
• Is any part of the property used solely as a dwelling, and therefore outside the inspection power?

It is also important to separate different legal questions. One question is whether the person is an involved third party. Another is whether the premises are business premises. A further question is whether the inspection is reasonably required. The fact that a business is somehow connected to a disposal does not automatically answer all three questions.

The guidance also shows that Revenue Scotland does not need to know every identity in advance. So an inspection is not blocked simply because the enquiry concerns an unidentified person or a wider class of persons.

Example

This is an illustration based on the guidance. Suppose Revenue Scotland is checking whether taxable disposals at a landfill site have been correctly treated for Scottish Landfill Tax. A separate business handled part of the transport and documentation for the waste and kept records at its own depot. If that business was involved with the taxable disposal, Revenue Scotland may be able to inspect that depot as the business premises of an involved third party, provided the inspection is reasonably required. It may inspect the premises, business assets on site, and documents there that relate to the taxable disposal. But if part of the property is used solely as someone’s living accommodation, that part cannot be entered under this power.

Why this can be difficult in practice

The phrase “involved in any capacity” is broad, but its application will still depend on the facts. There may be uncertainty at the edges about whether a person’s role is sufficiently connected to the taxable disposal.

The test of what is “reasonably required” is also fact-sensitive. It suggests more than mere convenience, but the guidance does not set out a detailed test on this page. In practice, the justification for the inspection, the scope of what is to be inspected, and the link to checking the tax position are all likely to matter.

Mixed-use premises can create practical difficulty as well. If a business operates from a home, it may not always be straightforward to distinguish the business areas from the parts used solely as a dwelling. That boundary matters because the dwelling-only area is outside the inspection power.

There can also be disputes about documents. The guidance permits inspection of relevant documents on the premises, but only where they relate to the taxable disposal. If the records are mixed, partly unrelated, or held in a form that spans several transactions, the scope of what may properly be inspected may require careful judgement.

Key takeaways

• Revenue Scotland may inspect the business premises of a third party involved in a Scottish Landfill Tax taxable disposal if the inspection is reasonably required to check a devolved tax position.
• The power can cover the premises, business assets on those premises, and documents there that relate to the taxable disposal.
• The power does not extend to any part of premises used solely as a dwelling, although business areas within a home may still be inspectable.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Inspecting Business Premises of Involved Third Parties for Tax Compliance

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