HMRC Tax investigation

When the brown envelope comes
Make sure you experts on your side

How to minimise your chances of being investigated

HMRC has been working on investigation procedure in the last decade to improve effectiveness by speeding up the procedure and introducing new penalties. Until now, it was starting the process with compliance visit and then taking the next step but now HMRC declares that its investigation process with use a new trial method called the Single Compliance Process, which is expected to reduce overall costs and improve customer experience.

What if you get it wrong?

HMRC targets four different areas during investigation. These areas are PAYE, VAT, Personal tax, and Company tax. Compliance can involve one or more than one of these areas. In case, HMRC has decided to investigate you and the compliance visit determines loss of tax on your part, a tax-geared penalty will be applied. The penalty will depend on the nature of error, concealed or innocent. In case HMRC decides that the error was due to lack of ‘reasonable care’, HMRC will check your last 6 years record and apply a penalty accordingly.

How to avoid a visit

HMRC will randomly select visits but they also visit when they doubt that something is expected to be wrong. Now it is easy for HMRC to investigate because of electronic filing and iXBRL filing with manual accounts. HMRC can easily track irregular transactions and tax evasion using this advanced filing system. However, you can still stay away from HMRC radar by following these tips

  • If you file your returns on time, each time, you will definitely stay away from HMRC radar. You should know deadline for filing VAT and personal tax so that you do not delay.
  • Just like filing on time, you also need to pay on time. This will ensure that HMRC is getting its money on time and therefore not being bothered much. You can pay VAT by debit cards while credit card is great for paying your tax.
  • You should ensure that your record keeping is up to date and properly managed. This will exhibit your professional approach to business and HMRC will know that. You will also be able to answer queries from HMRC efficiently since you will have copies of all your receipts and invoices.
  • You should not just stamp the accounts prepared by your accountant but review them carefully. If you spot anything unusually, take time to talk to your accountant asking for an explanation. Remember, it is your company and you are responsible to HMRC for tax.
  • If you have to meet HMRC, seek professional advice. Never meet HMRC alone. It will leave you exposed. Similarly, if HMRC has initiated an investigation, hire an expert to avoid issues with HMRC.
  • Always tell the truth. Concealing your tracks will not work with HMRC.


If HMRC has initiated an investigation against you, it means that HMRC is expecting something wrong with your tax. You can stay low on HMRC radar by simply filing returns and paying taxes on time. You will have the upper hand during any investigation if you review tax returns, keep the receipts, and explain huge variations on side notes when filing tax returns.

HMRC are Becoming more heavy handed with their Enquiry letters. Don't stress & get professional advice

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