About compliance checks
HMRC carry out compliance checks to:
- make sure you’re paying the right amount of tax at the right time
- make sure you’re getting the right allowances and tax reliefs
- discourage tax evasion
- make sure the tax system is operating fairly
Something may trigger a check. However, HMRC has the right to check whether any tax return is accurate and complete.
Watch HMRC video on how compliance checks work.
Get authorisation for your tax agent to deal with checks
If you have a tax agent or adviser and want them to deal with HMRC on your behalf, they must have formal authorisation. HMRC will deal with them during the check if they already have formal authorisation.
If they do not have formal authorisation, you must apply for temporary authorisation on their behalf so they can deal with your compliance checks.
Why HMRC carries out checks
Certain things may prompt HMRC to open a compliance check into your tax affairs. These could include:
- entering figures on a return that appear to be wrong
- making a large claim for a VAT refund when turnover is low
- declaring a small amount of tax when turnover is high
HMRC will call or write to you, and your tax agent if you have one, to say what they want to check and why. If you think they should stop the check, you should tell them why.
If HMRC have started a check, you should continue to file your tax returns and pay your taxes if they’re due.
HMRC may open a compliance check into any tax credits claims to make sure you’re getting the right amount of money.
Helping HMRC with the checks
During the checks HMRC may ask you to:
- send them any information or documents that they may need
- meet with HMRC to discuss your tax affairs and records, but you do not have to meet them if you do not want to
If you have business premises or run your business from home, HMRC may ask to visit them to inspect your premises, assets and records. If you think the request is unreasonable or not relevant to the check, let the officer who requested the information know.
If HMRC cannot agree with you about sending the information or documents, they may use legal powers to get them. HMRC will do this by sending you an information notice. If you get a notice, you must give HMRC what they’ve asked for, or they may charge you penalties.
You are responsible for giving HMRC accurate information, and if you have a tax agent dealing with them on your behalf, you should make sure they have all the relevant facts.
If you help HMRC with the compliance check, we can:
- complete it quickly and reduce any inconvenience to you
- reduce the amount of any penalty you may be charged if HMRC find there’s something wrong
If you’re affected by coronavirus
If you cannot help HMRC with the check because you’re facing difficulties with the impact of coronavirus let their officer dealing with your check know. HMRC will work with you to agree the best way forward taking into account any difficulties you are facing.
If after the checks, HMRC conclude that you owe them tax, but you cannot afford to pay it immediately, contact the HMRC coronavirus (COVID-19) helpline. You can talk to them about payment arrangements that you can afford.
You might be able to get coronavirus (COVID-19) support if you’re working less or not working.
If you need help during the checks
HMRC can help you if you need extra support when dealing with a compliance check.
If you have any health conditions or personal circumstances that may make it difficult for you to deal with the compliance check, let the officer know. They will work with you to put in place any reasonable adjustment needed.
If you need more time, tell HMRC. We may agree to allow extra time if there’s a good reason, for example, if you’re seriously ill or someone close to you has died.
If you need someone to speak to HMRC for you
You can ask someone else to deal with HMRC on your behalf, for example, a friend, relative or an adviser from a voluntary organisation. You’ll need to appoint them to talk to HMRC for you first.
Get independent help from other organisations
You can get help from charities and other organisations if you do not understand something about the compliance checks process.
Find out about the different types of checks and what happens during and after the check.
Outcomes of compliance checks
If the check shows there is nothing wrong, HMRC will bring it quickly to an end. If their checks show you have overpaid tax, you will be repaid with any interest due added. If you have underpaid tax, you will need to repay this. You will be charged interest and you may receive a penalty.
HMRC may issue an assessment or amend your return to collect any unpaid tax.
You can apply for Alternative Dispute Resolution (ADR) if you do not agree with HMRC’s decision or with what they’re checking at any time during the checks.
You may be charged a penalty if HMRC find something wrong during the check.
HMRC will consider how much you cooperated with them when deciding if they can reduce the penalty. In general, the more help you give, the lower the penalty will be.
Find out what you can do to reduce any penalty HMRC may charge.
For more information on penalties, watch this video on why a penalty may be charged, how it’s worked out and what you can do about them.
It’s HMRC’s policy to deal with fraud using civil investigation procedures, wherever appropriate.
HMRC reserve criminal investigation for cases where they need to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
Find out more about HMRC criminal investigation policy.
If you disagree with the outcome of the check
If HMRC make a decision you can appeal against, they’ll write to you about the decision and tell you what to do if you disagree.
You will usually have 3 options. Within 30 days, you can:
- send new information to the officer dealing with the check and ask them to take it into account
- have your case reviewed by an officer who has not been involved in the matter
- arrange for an independent tribunal to hear your appeal and decide the matter
This video explains what you can do if you disagree with a decision following a compliance check.
Information taken from HMRC guidance on Gov.uk