HMRC Compliance Checks & Tax Investigations

Why HMRC Opens Compliance Checks

A compliance check (sometimes called a tax investigation or enquiry) is when HMRC examines your tax return or records to ensure you’ve paid the right amount of tax. It ranges from a simple query to a detailed investigation.^[1] Keeping accurate digital records and filing through HMRC-recognised software reduces the chance of the errors that trigger one.

Types of Check

HMRC conducts different levels of scrutiny:^[2]

Aspect enquiry — HMRC queries one or two specific items on your return
Full enquiry — HMRC examines your entire return and supporting records
Random check — selected at random, not because of a suspected problem

Why You Might Be Selected

Common triggers include:^[1]

Figures that seem inconsistent or unusual compared to your industry
Large or unexpected changes in income or expenses year-on-year
Information HMRC receives from third parties that doesn’t match your return
Late filing or repeated errors
Random selection

What Happens During a Check

You receive a written notice from HMRC explaining what they’re checking^[2]
HMRC may ask for documents and records (invoices, bank statements, receipts)
They may arrange a meeting (at your premises, your accountant’s office, or an HMRC office)
HMRC reviews the information and raises any questions
The check concludes with a closure notice — confirming the outcome

Your Rights

During a compliance check, you have the right to:^[4]

Be treated fairly and professionally
Appoint an accountant or tax adviser to deal with HMRC on your behalf
Know what HMRC is checking and why
Appeal if you disagree with the outcome

Penalties for Errors

If HMRC finds inaccuracies, penalties depend on the reason for the error:^[3]

Type of Error	Penalty Range
Careless (lack of reasonable care)	0% – 30% of extra tax due
Deliberate	20% – 70%
Deliberate and concealed	30% – 100%

Penalties are reduced if you tell HMRC about errors before they find them, help them calculate the tax owed, and give access to records.

If You Disagree

You can appeal HMRC’s decision if you think it’s wrong. Start with an internal review by HMRC, or go directly to the Tax Tribunal.^[5]

Frequently Asked Questions

What triggers an HMRC compliance check?

Common triggers include figures that seem inconsistent with your industry, large year-on-year changes in income or expenses, information from third parties that does not match your return, late filing, and random selection.

What happens during an HMRC tax investigation?

HMRC sends you a written notice, may request documents and records, could arrange a meeting, reviews the information, raises any questions, and concludes with a closure notice confirming the outcome.

What are the penalties for tax return errors?

No penalty applies if you took reasonable care. Careless errors attract 0–30% of extra tax due, deliberate errors 20–70%, and deliberate and concealed errors 30–100%. Telling HMRC before they find the error always results in a lower penalty.

Can I appeal an HMRC compliance check decision?

Yes. If you disagree with HMRC’s decision, you can request an internal review by HMRC or go directly to the independent Tax Tribunal to have your case heard.

Sources

HMRC compliance checks — GOV.UK
Tax compliance checks: information — GOV.UK
Compliance checks: penalties — GOV.UK
Your rights during a compliance check — GOV.UK
Tax appeals — GOV.UK