An HMRC compliance check is a review of your tax affairs to make sure you are paying the right amount. It is not the same as being accused of anything. HMRC uses compliance checks to look at the accuracy of a return, a claim, or the records behind them, and most checks are routine. If a brown envelope has landed, this article explains in plain English what an HMRC compliance check is, the forms it takes, how HMRC runs and corresponds during one, and how to respond calmly from the first letter. If you would like us to deal with the check for you, our HMRC compliance check help page sets out how we can step in.
What is an HMRC compliance check?
A compliance check is HMRC's way of confirming that the tax you have reported is correct. According to GOV.UK, HMRC can check "any taxes you pay", including your Self Assessment return, your Company Tax Return, and your PAYE records and returns if you employ people. The check may be as narrow as a single figure or as broad as a full set of accounts.
A check is different from a criminal matter. It is a civil process aimed at getting the figures right, and in many cases it ends with no change at all. Where HMRC does find an error, the outcome is usually additional tax, interest, and sometimes a penalty, rather than anything more serious. The most serious cases, involving suspected deliberate fraud, are handled separately under Code of Practice 9, which we explain on our tax investigations page.
What are the different types of compliance check?
Not every check is the same size. In practice, HMRC's reviews tend to fall into three broad shapes.
| Type of check | What it covers |
|---|---|
| Aspect check | Focuses on one part of a return or one entry, for example a particular expense, a claim, or an entry HMRC wants to understand. Often resolved quickly once the point is explained. |
| Full check | Reviews the whole return and the records behind it. More common where the figures are complex, where a business has employees or subcontractors, or where an aspect check raises wider questions. |
| Random check | Selected without any specific concern, as part of HMRC's work to test how well the system is working. Being picked does not mean HMRC suspects a problem. |
You will not always be told which label applies. What matters more is the scope of what HMRC has asked for, because that tells you how much is in question.
How does HMRC run a compliance check now?
A check almost always begins with a letter. GOV.UK confirms HMRC "will write or phone to say what they want to check", and if you have an accountant, HMRC contacts them instead. HMRC has also published guidance to help people through the process, including short videos and a series of compliance checks factsheets, which is useful if you do not have an adviser.
More of this correspondence now happens digitally. HMRC increasingly asks for documents to be uploaded or sent electronically rather than by post, and communicates through secure online channels. The exact mechanics change over time, so for the current process, timescales, and factsheets it is best to work from the live GOV.UK compliance checks guidance rather than an older letter or article. One point does not change: read carefully what HMRC has actually asked for, and answer that, no more and no less.
What can you expect, and what are your rights?
The first letter usually sets out what HMRC wants to see and a date to respond by. HMRC may ask for records, ask questions about how you work, or ask to visit your home, business, or your adviser's office. You have rights throughout.
You can appoint an accountant or tax adviser to deal with HMRC on your behalf, and you can have an accountant or legal adviser with you during any visit. If the deadline is not realistic, you can ask HMRC for more time, and a reasonable request is normally accommodated. If you disagree with a decision, you can apply for alternative dispute resolution or use HMRC's formal appeal routes. Penalties for not providing information apply only where you do not have a reasonable excuse, such as serious illness or bereavement.
Example. A sole trader receives a letter querying motor expenses in one year. That is an aspect check. By sending the mileage records and a short explanation within the deadline, the point is settled with no change to the tax. Answering the narrow question, rather than volunteering unrelated information, keeps the check small.
How should you respond to the first letter?
Calmly, and on time. Note the deadline, gather only what has been asked for, and keep your answers clear and factual. Your first reply sets the tone and often shapes what HMRC does next, so accuracy matters more than speed. If anything is unclear, or the check feels larger than you expected, take advice before you reply. It is far easier to keep a check contained from the start than to unwind an answer given in haste.
Frequently Asked Questions
The terms overlap. Most compliance checks are routine reviews of a return or a specific figure. A smaller number of cases, where HMRC suspects deliberate fraud, run under Code of Practice 9 and are far more serious. Our tax investigations page explains the difference.
Yes. You can appoint an accountant or tax adviser to correspond with HMRC on your behalf, and if you already have an agent, HMRC contacts them rather than you. You can also have an adviser with you during any visit.
Ignoring a compliance check letter tends to make matters worse. HMRC can charge penalties where you do not provide information without a reasonable excuse, and can press ahead using the information it has. It is better to reply, or to ask for more time if you need it.
Yes. If the deadline in the letter is not realistic, you can ask for a reasonable extension, and HMRC will normally agree. It is better to request more time early than to send a rushed or incomplete reply.
No. Many checks end with no change, and where an error is found, whether a penalty applies depends on the reason for it and how the matter is handled. Careful, prompt cooperation is the best way to keep any penalty to a minimum.
If HMRC has opened a compliance check on you or your business, we can deal with it for you. Call us on 020 8554 2135 or email info@visionconsulting.co.uk, or see our HMRC compliance check help page and contact us before you respond.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances.