How likely is an HMRC tax investigation?

Around 1 in 60 self-employed taxpayers and 1 in 30 limited companies face a compliance check each year. Higher risk if your figures look unusual for your sector, if you've had errors before, or if anonymous tip-offs are received.

How long does an HMRC investigation take?

Aspect enquiries (one issue) often close within 3–6 months. Full enquiries can take 18 months or longer. The clock starts when HMRC opens the enquiry, not when they finish — they can't open new enquiries on closed years unless there's evidence of negligence or fraud.

Should I get a solicitor or accountant for an HMRC investigation?

An accountant who specialises in tax investigations is usually the right first call. They speak HMRC's language, know the law on what HMRC can and can't demand, and can often close enquiries quickly. Solicitors are needed if criminal proceedings are mentioned.

Prepare for an HMRC Tax Investigation

How to Prepare for an HMRC Tax Investigation

In short

HMRC opens around 300,000 compliance checks per year across all taxes. Most are random or triggered by data analytics — the 'Connect' system cross-references your tax return against bank data, Land Registry, DVLA, employer records, even social media. If something doesn't reconcile, you may get a letter.

Investigations range from a single-issue 'aspect enquiry' (one specific point) to a full enquiry (everything). You generally have 30 days to respond to information notices. Engage an accountant immediately if you receive one — the difference between handling it well and badly is often six or seven figures over your lifetime. Investigation insurance (~£100/year) covers the professional fees of defending an enquiry; without it, fees can run into thousands.

Fahmina Jahan MIABFounder, Fernside Accounting · Woodford Green, London

Receiving a letter from HMRC saying they want to investigate your tax affairs is one of the most stressful things that can happen to a small business owner. But understanding the process and being well-prepared significantly reduces the risk.

What triggers an HMRC investigation?

Unusually high expenses relative to turnover
Income inconsistent with lifestyle
Late or amended returns
Discrepancies with third-party data (banks, Airbnb, eBay etc.)
Random selection

Types of HMRC enquiry

An aspect enquiry focuses on one specific area. A full enquiry examines your entire return. HMRC must open an enquiry within 12 months of receiving your return.

What records do you need?

HMRC can request up to 6 years of records (20 years for fraud): bank statements, sales invoices, purchase receipts, payroll records, VAT records, contracts and mileage logs.

How to respond

Never ignore HMRC correspondence. Always respond within the given timeframe. If you disagree with their findings, you have the right to appeal. Get professional representation immediately.

How Fernside Accounting can help

We represent clients throughout HMRC enquiries and work with The Tax Lead on complex cases. Contact us immediately if you've received an HMRC enquiry notice.

Our pricing

Online accountants for the UK.

Modern compliance for micro businesses and growing SMEs, backed by specialist tax expertise when you need it. Transparent monthly fees — no surprises.

Starter

£45

per month + VAT

Growth · most popular

£125

per month + VAT

Scale

£350

per month + VAT

Book a free 20-min call 📞 020 3376 0933