Tax inspections and how to survive them
Posted on 11th March 2025
You may have a tax inspection or compliance check at any time as an individual taxpayer or if you run a business. Ultimately you are responsible for your tax matters, even when you work with a bookkeeper or accountant. Tax enquiries can last for months and involve a lot of work which your fees don’t normally cover.
LEOBS now offers a tax inspection service to give you peace of mind if the tax inspectors come to call.
Reasons for HMRC tax compliance checks
HMRC looks for signs of inaccuracies which could include, for example:
inconsistent figures in a tax return
large claims for VAT refunds when company turnover is low
declaring very little taxable income when turnover is high.
If HMRC finds evidence of fraud a criminal investigation may take place.
HMRC can check:
taxes you pay
accounts and tax calculations
your Self Assessment Tax (SAT) return
your Company Tax Return
PAYE records and returns, if you employ people.
If you think that’s too much information to review, you should know HMRC uses artificial intelligence tools for the job.
What does a tax check involve?
HMRC will write or phone you or, if you use an accountant, contact them instead. In the first place, HMRC sends you an inspection or information notice. Tax Inspectors may ask to visit your home, business or your accountant’s or bookkeeper’s offices. Alternatively, they may ask you to visit them and, if you wish, your accountant or a lawyer can attend with you.
There are two types of investigation:
Aspect enquiry. This happens when HMRC has concerns about a particular part of your accounts or tax return.
Full enquiry. HMRC may review your full tax return or accounts for significant errors.
If you don’t provide the information they request or refuse a visit, you could pay a penalty. You can only postpone your response if you’re seriously ill or someone close to you died recently.
After the check, HMRC will write to you and explain their conclusions, after which:
you may receive a repayment if you’ve paid too much tax, along with interest on the amount you’re owed
HMRC could ask you to pay additional tax you owe within 30 days plus interest from the date the tax was due.
In addition, you may also pay penalties if:
you didn’t advise HMRC about an error at the first opportunity
you were unhelpful during the check.
If you have problems meeting the requests for information or paying any overdue tax, you should let HMRC know. If you think the check shouldn’t take place, you can give your reasons in a letter. You can also apply for alternative dispute resolution (ADR) if you don’t agree with HMRC’s check or decision.
Help with tax investigations
LEOBS provides a tax investigation service to help you through this process privately or as a business owner. If HMRC decides to inspect your finances, accounts and supporting information, you receive thorough and professional support throughout.
It’s all very straight forward and will give you peace of mind. Your subscription covers all the professional fees involved for:
Pay as You Earn (PAYE) and National Insurance Contribution (NIC) compliance checks
IR35, employment status and Construction Industry Scheme (CIS) enquiries and disputes
VAT compliance checks and disputes
business record checks, inspections and interventions.
You’re also covered for enquiries about:
Corporation Tax and Income Tax
Inheritance Tax and probate returns
Stamp Duty and Stamp Duty Land Tax
National Minimum Wage and National Living Wage payments
Child Tax Credit
Student loans
Gift Aid
Companies House confirmation statements
Pension auto-enrolment reporting.
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