How to Survive an HMRC Tax Investigation?

HMRC tax investigation

How to Survive an HMRC Tax Investigation?

Just the word investigation makes one start sweating. An HMRC tax investigation is stressful for any business. Wait, are you wondering what an HMRC tax investigation is? HMRC has the privilege to check your affairs anytime to ensure you’re paying the perfect measure of tax. Yes, you can be caught by surprise. In the event that your business is chosen, you’ll get an authority HMRC examination letter or call in which they’ll mention to you what they need to take a gander at. This may incorporate things like:

  • the tax that you pay
  • your records and tax estimations
  • your Self-Assessment tax return for a given year
  • your Company Tax Return
  • your PAYE records and returns in case you’re a business
  • your VAT returns and records in case you’re VAT-enlisted
  • If you have an accountant, HMRC may reach them rather than you, however, your accountant should be in contact to enlighten you concerning it.


Wondering why your accounts might be investigated? There are many answers to this question so our accountants will keep it brief for you, and tell you why you might be in the list:

unusual activity in your tax records or accounts could hail you up for an HMRC charge consistency check.


  • Submitting observably erroneous figures on an assessment form – so it truly pays to have an accountant to bring to the table proficient guidance about your records and check over your government forms before you send them.
  • The business you work in being viewed as “high risk”(e.g. in the event that there are a ton of “cash in hand” exchanges)
  • Somebody making HMRC aware of irregular action in your records
  • Observable irregularities between assessment forms (e.g., a major fall in pay starting with one year then onto the next)
  • Often documenting tax forms late
  • Your records not coordinating the business standards
  • You can’t generally maintain a strategic distance from a tax investigation: your records may essentially be chosen indiscriminately for examination, regardless of whether your books are all together and you generally document tax on schedule, so it truly pays to ensure your books are consistently up-to-date.


The tidier your books, the snappier and less excruciating the assessment review will be.

Our accountants give you tips on the best way to endure even the most exhaustive HMRC review. Maintain your records in control before you get a tax investigation letter.

  • Keep your records up to date.

This cannot be emphasized enough. At the point when your records are up to date, not exclusively would you be able to get on pivotal data rapidly, (for example, regardless of whether clients haven’t paid you on schedule), you can likewise effectively react to any HMRC review enquiries without the pressure of looking for pieces of paper.


  • Record your Self-Assessment and VAT returns on schedule

HMRC is bound to choose your records for audit on the off chance that you submit tax or VAT returns late, so ensuring you stay on head of your assessment commitments can assist you with remaining on the correct side of HMRC. What do we learn here? That punctuality is the key!


  • Check your data thoroughly

At the point when it’s an ideal opportunity to document, you should simply check the information, fill in the missing subtleties and afterwards present your Self-Assessment government form or MTD-viable VAT return legitimately to HMRC.


Keeping HMRC out of the picture for a second, your business will profit by clean, modern records. Being all prepared comes in handy especially in accounting! You’ll not exclusively be prepared if HMRC opens an enquiry, however you’ll additionally know how your business is getting along on an everyday premise. This will empower you to figure out any issues in your records before they become significant issues and will assist you with finding possible chances, similar to whether you may have the option to spare some assessment by purchasing new gear sooner.

At times even HMRC catches you by surprise and you just do not know when they might end up at your doorsteps. If you are aware of a blunder you have made then please try to rectify is as soon as possible and if you believe everything is set at your end then still there is no harm in going through the records just to be sure everything is intact. In the event that you are forced to bear an HMRC charge examination, at that point this is what you ought to do:

Keep a calm mind

The underlying response of most entrepreneurs is to be furious or dreadful and need to determine the issue as fast as could reasonably be expected. Be that as it may, you should oppose the compulsion to call HMRC right away. All things being equal, contact your accountant (in the event that they have an insight of duty examinations) or connect with a tax specialist to talk about what you ought to do straight away.

Have a genuine discussion

There’s no point looking for proficient guidance in case you’re not going honestly about any blunders you might know about. At exactly that point will they have the option to inform you on your best course regarding activity given their insight into the nuances of the HMRC tax investigation measure.

Check HMRC is qualified to demand certain data

Check with a master that HMRC is qualified for requesting the documentation it needs to see before reacting to the underlying data demand. On the off chance that you don’t know why HMRC needs certain data, at that point inquire. In the event that it’s not pertinent to your tax return, at that point it ought not to be given.

Comply with HMRC’s time constraints

HMRC will frequently propose cutoff times for certain data or reactions to be given. On the off chance that the cutoff times are sensible, at that point you should ensure you meet them as your participation will be considered with regards to deciding any penalties.

Because of internal pressure, HMRC may not generally set sensible cutoff times. In the event that you can’t give the data mentioned inside the cutoff time, at that point you should contact HMRC right away.

Come clean

You ought to consistently come clean in your dealings with HMRC. HMRC has built up a ‘super computer’ called Connect which gives it admittance to an expansive scope of data about the property, resources, financial balances and substantially more. That implies there’s a decent possibility it knows more than it’s letting on.

With regards to penalties, the contrast between unveiling any issues promptly and attempting to cover or deny blunders can be colossal, so contemplate how you react.

Going to gatherings

It isn’t surprising for HMRC to propose a meeting in the beginning phases of a tax enquiry. Nonetheless, in a standard examination, there is no commitment to join in. All things considered, you ought to illuminate HMRC that you won’t go to the gathering, however, will even now coordinate in full.

On the off chance that you are available to go to a gathering, at that point you ought to approach the examining official for a definite plan of the things they need to cover previously. You ought to experience this plan with your counsellor (who ought to likewise go to the gathering with you) and consider the inquiries you’re probably going to be posed and set up your answers. You ought to likewise take notes of all that is said.

Think about the expected penalties

It’s fitting to remember the possible penalties as all that you state from the second you begin comparing with HMRC could affect the result of the investigation.

In the event that you have committed a senseless however guiltless error and have done all that you can to put the misstep right then you may not get a penalty and will just need to pay the tax you owe. In the event that you are charged a penalty, at that point it’s probably going to be around 15% of the tax due.

In the event that you have made a purposeful mistake and not taken sensible consideration to ensure your assessment form is right then you could get a penalty of up to 70% of the sum due.

Make instalments on account

In the event that you do owe tax to HMRC, at that point it may be conceivable to agree. A few counsels are pros with regards to arranging instalment concurrences with HMRC. They could arrive at a ‘Time to Pay’ game plan for your benefit that surrenders you to a year to pay the tax you owe without bringing about additional penalties.

Act now!

An HMRC tax investigation won’t disappear. Participation is the way to diminishing and conceivably eliminating the danger that a tax penalty will come to your direction. It will likewise permit you to finish the investigation as fast as could reasonably be expected so you can focus in on maintaining your business.

So, basically, the point to note is whenever you are caught by surprise by the HMRC just don’t lose your cool and take everything thrown your way very calmly. Finance teaches us one thing which is to be rational and state the facts and figures and that is exactly what you have to do in this case scenario.

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