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. 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 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 it can end with no change at all. Where HMRC does find an error, the outcome can be additional tax, interest and, in some cases, a penalty. Cases where HMRC suspects deliberate fraud are handled separately, under Code of Practice 9 (which has its own page) or, in some cases, by criminal investigation.
What are the different types of compliance check?
Checks differ in how much they cover and in how they were chosen. HMRC selects most enquiries on risk and a smaller number at random (HMRC manual SALF404); the table sets out the kinds you may hear about.
| 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. Can close once the point is explained. |
| Full check | Reviews the whole return and the records behind it. Can follow 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 long does an HMRC compliance check take?
There is no published answer, and that is worth saying plainly. HMRC does not publish a standard timescale for a compliance check. Its own guidance on compliance checks says only that if you cooperate it can "complete it quickly and reduce any inconvenience to you".
What actually drives the length is the scope and the state of the records. A single-figure aspect check answered with a clear explanation and the documents behind it has less for HMRC to review. A check across a full set of accounts, or one where records have to be reconstructed, takes longer, because each round of questions takes HMRC time to review and can generate the next round.
The two things within your control are response speed and completeness. A partial answer invites another round of questions; a complete one may not. Where a deadline in a letter cannot realistically be met, GOV.UK confirms you can ask for more time if there is a valid reason, and asking is better than missing it.
How does HMRC run a compliance check now?
A check begins with HMRC getting in touch. GOV.UK confirms HMRC "will write or phone to say what they want to check", and if you have formally authorised an accountant as your agent, HMRC deals with 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.
HMRC's letter says how it wants documents sent, by post or electronically. 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: HMRC's letter says what it wants to check, and that is the starting point for any reply.
What can you expect, and what are your rights?
The first letter 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 business, your adviser's office, or your home if you run your business from there. 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 HMRC may agree if there is a valid reason. If you disagree with a decision, you can apply for alternative dispute resolution, and where the decision can be appealed, HMRC's decision letter says how; you usually have 30 days from the date of that letter to appeal or accept a review. Penalties for not providing information can follow if HMRC sends a formal information or inspection notice and you do not comply without 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.
What the first letter actually tells you
Read it for four things before you respond to any of it.
The scope. The letter says which tax, which period, and whether HMRC is asking about one entry or the whole return. That single distinction sets everything else: an aspect check and a full enquiry are different situations requiring different responses.
The deadline. There will be a date to reply by, and it is the one thing not to let slide, because GOV.UK is explicit that penalties can follow if you do not respond to a notice, unless you have a reasonable excuse such as serious illness or bereavement.
What is being asked for. Separate the requests HMRC is entitled to make from those it is not. A formal information notice carries different weight from an informal request, and it is worth knowing which you are holding.
What it does not say. For an enquiry into a tax return, HMRC does not say whether it was selected on risk or randomly, although it may identify the areas it will focus on. HMRC may already hold information before it writes, from third-party data or a mismatch against another return. Working out what prompted it changes how you answer.
Before sending documents, check exactly what HMRC has asked for.
How cooperation affects a penalty
If HMRC finds something wrong, it may charge a penalty, and how you deal with HMRC at that point affects the amount. GOV.UK states it plainly: HMRC considers "how much you cooperated with us when deciding if we can reduce a penalty", and "in general, the more help you give, the lower the penalty will be".
The penalty depends on the nature of the error and how it came about, and HMRC's factsheets set out the bands for a particular case. The behaviour behind the error is assessed, so an honest mistake and a deliberate one are not treated alike, and volunteering something before HMRC finds it counts for more than conceding it afterwards.
The practical point: the decisions that determine the penalty are made during the check, not at the end of it. How questions are answered, how quickly, and whether anything is disclosed voluntarily are all live variables while the check is open.
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 becomes part of the record HMRC works from, so accuracy matters more than speed. If anything is unclear, or the check feels larger than you expected, take advice before you reply.
For how long the process usually runs, see our guide to how long an HMRC investigation takes.
Frequently Asked Questions
The terms overlap. A compliance check can review a whole return or one specific figure. Cases where HMRC suspects deliberate fraud may run under Code of Practice 9 or, in some cases, as a criminal investigation, 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 once your agent is formally authorised, HMRC deals with them rather than you. You can also have an adviser with you during any visit.
Ignoring a compliance check letter does not stop the check. HMRC can issue a formal information notice and charge a penalty if you do not comply with it 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 more time, and HMRC may agree if there is a valid reason. It is better to request more time early than to send a rushed or incomplete reply.
No. A check can 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. How much you cooperate is one of the things HMRC considers when deciding whether a penalty can be reduced.
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 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. Speak to us before acting.