1) Watching live TV, physically, with your eyes (and ears), sourced from a live broadcast or data stream (terrestrial or online, etc)
2) Recording, to any medium, in any format, a live stream, sourced from a live broadcast or data stream (terrestrial or online, etc)
The question of whether your equipment has the potential to allow for the above is irrelevant. It is the act of using said equipment to achieve any of the above 2 points that means you need a TV license, and is what they have to prove you have done (or are doing) before they can prosecute you.
And you are right. You don't need to let them in at all. They may tell you otherwise as an intimidation tactic, but they can only gain entry if you let them or via a search warrant, which normally requires a court order.
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Edited by mixt (Tue 13-Dec-16 12:15:48)