Your business could come under scrutiny at any time. Are you prepared for when the inspector calls?

Very few small businesses will realise that more than 300 inspectors have the right to enter their premises and pass judgement. This isn’t meant to panic you – indeed, you may have only experienced half a dozen inspections in twice as many years. But you should know the importance of prioritising those more inspection-prone areas of your business.

There is a long, long list of what these inspectors might regulate. This includes your VAT returns, Customs & Excise goods, health and safety at work issues, food standards, environmental health matters, trading standards, fire safety, building works and repairs, and even goods vehicles.

The frightening 300 inspectors statistic is often quoted by the Federation of Small Businesses (FSB) when lobbying on behalf of its 185,000 members.

Post-Budget this year FSB national policy chairman John Walker pointed out that Chancellor Gordon Brown’s promise to merge 35 multi-tasking inspectorates into nine still needed to go that extra mile in view of the fact that 40 new inspections had been introduced in the past five years.

Inspectors may show up for a variety of reasons. It may be routine or because you are a new business. It may be because of customer complaints that they have been sold out-of-date goods, or became unwell, or thought the goods not fit for their purpose, or believed the retailer to be engaged in selling illegally to children, and so on.

Many of these inspectors do not have to make an appointment, and they certainly won’t if they’re responding to a complaint from the public or a fellow retailer. And you can’t refuse them entry – although you should check that they have either a warrant (in the case of the police) or the statutory power of entry.
If you are a statistics junkie (like your writer), then you will like to know that there are 63 national regulators employing 41,000 staff, of whom 12,000 are inspection or enforcement staff. There are 2.4 million business premises which are inspectable by national regulators. In total, national regulators inspect at least 600,000 premises a year. These national ones, such as the Environment Agency, covering pollution and wastes regulations, should hopefully not trouble the c-store much (you see, the grass can be greener!). Although, of course, another, such as the Health & Safety Executive, can get very interested anywhere that ‘workers’ are involved.

At local level there are 400-odd local authorities employing just under 20,000 staff of whom 5,500 work primarily on inspection and enforcement. These local guys carry out four times as many inspections as national regulators.

Two of the best known and probably most feared by food and drink retailers are the trading standards officer (TSO) and the environmental health officer (EHO). These twin authorities have the right to enter your premises at all reasonable hours, unannounced. This pair are local regulators and boy, do they regulate. In 2002-2003 (the most recent statistics available) they carried out 465,500 and two million inspections respectively.

TSOs have diverse responsibilities such as checking food composition and labelling, and weights and measures – including the calibration of petrol pumps if you are a forecourt operator – and they also regulate the sale of alcohol which they tend eagerly to impress upon off licences via their regular test purchase ‘stings’.

EHOs are responsible for food hygiene and food safety. Obviously, the worst thing you can do to a customer is poison him or her. If EHOs suspect your foods are not up to scratch, they can take samples and photographs and inspect your records. Penalties can range from a ticking off (if, say, your best-before dates are beyond what they should be) to an emergency prohibition, banning you from trading because of an imminent health risk.

In the case of both of these types of inspection, the retailer’s best defence is to prove due diligence. If you are subject to alcohol test purchasing, having a refusals register, age-related notices around the store and ID cards on the counter will show that you do your best to avoid selling to the underaged.

With food, cleanliness is next to godliness, and paperwork will prove it. You should routinely check food deliveries, noting best-before and use-by dates. Don’t leave deliveries hanging around and rotate stock on each delivery. You should regularly take temperatures on the surface and the base of the packs and record them along with the time and date that you carried out your own inspection. Then, when the inspector calls, it should keep you off their ‘risk’ register and they won’t trouble you again in a hurry.

Mukesh Patel, who runs Betty’s News at Maidstone in Kent, was recently informed that he would be subject to a VAT inspection. He handed over the problem to his accountant and is confident that all his books are in order. However, his accountant has stuck him with a bill for an extra £600 which he is disputing as he thought the accountant didn’t do any extra work. Accountants often recommend that retailers insure themselves against a VAT inspection as it will usually entail more work for the accountant and therefore cost more money.

The customer isn’t always right. Khalid Khawaja, who runs a Costcutter at Southend-on-Sea, Essex, got a visit from two TSOs after a tiff with a customer who had come in to buy a loaf of bread which was price-marked at 39p. Because he had no pennies in the till Khalid said, sorry, I’ll have to charge you 40p. The lady decided to haggle and offered 35p. Khalid said the bread cost him 35p. The lady left and reported him. The two TSOs said he had done nothing wrong – the customer had a choice and could go elsewhere’.

A trader in London’s Southall was visited by C&E officers in June. They took away £900 of cigarettes which they seemed to think were suspect because of the buying patterns. The retailer, who bought in bulk at the end of December and then again in February, from Makro, and in March, from Bestway as well as a ‘few bits in between’, spent between £5,000 and £6,000 on cigarettes and paid more than £1,000 in VAT. He has invoices for the lot. “I bulk buy before the Budget,” he said, “it’s not against the law. There isn’t much profit unless you bulk buy.” Three months later C&E has still not returned the cigarettes.

Many retailers have rung C-Store’s helpline after run-ins with TSOs’ test purchasing stings. Most are guilty of nothing more than an inability to identify a tall, hairy, confident thing as being aged under 18. Some have likened the subsequent interviews to police-style interrogations. In fact, the police are not allowed to use entrapment tactics (where you are invited to commit a crime) which is a common TSO ploy. There should be a law against this method of ‘inspection’.