If you receive a brown envelope inviting you to take part in HMRC compliance checks, it’s natural to feel uneasy. A check doesn’t mean HMRC suspects wrongdoing. It’s how the department tests returns, confirms that records are accurate, and encourages better record-keeping in future. HMRC runs checks across self assessment, VAT, PAYE and corporation tax using a mix of risk profiling, data-matching and random sampling. In recent years, the activity has intensified: HMRC’s own figures show a 2023–24 “compliance yield” of £41.8 billion – tax collected or protected through enquiries and related work (HMRC, 2024). That, coupled with the latest estimate of the UK tax gap at 5.3% of theoretical liabilities, or £46.8 billion in 2023–24, explains why HMRC compliance checks remain a priority (HMRC, 2025).

In this guide, we set out what a check looks like in practice, your rights and obligations, and the steps we recommend clients take to prepare. Our aim is simple: reduce disruption, protect your position, and help you respond clearly and on time. We’ve supported individuals, owner-managed businesses and larger entities through reviews ranging from “single-issue” queries to full record inspections. With the right preparation, a check can be resolved efficiently – and often with helpful pointers for better systems, cashflow planning and controls.

HMRC compliance checks: What they are and when they happen

HMRC can open a check to confirm you’ve paid the right tax at the right time and claimed only the reliefs you’re entitled to. The department explains the process in its factsheet About compliance checks: CC/FS1a (HMRC, 2025). A check may be:

Risk-based, where HMRC’s systems flag discrepancies or unusual patterns.
Random, to test overall compliance levels.
Triggered by third-party data, such as information from banks, employers or overseas tax authorities.

Checks range from simple information requests to visits to business premises. For most individuals and smaller businesses, the process is handled by post or phone, with deadlines for supplying documents and answering questions.

What to expect: Step-by-step

Notice of check: You’ll receive a letter, email or call confirming what HMRC wants to review and which records it needs.
Scope and period: HMRC will set out the tax head (for example, Self Assessment or VAT) and the periods in scope.
Information request: You may be asked for invoices, bank statements, contracts, VAT workings, payroll reports or management accounts.
Clarification call or meeting: HMRC may arrange a call to understand your business model, systems and controls.
Outcome letter: HMRC will either close the check with no changes, ask for adjustments, or propose penalties where it believes there’s an error.
Appeal/Review: You can seek an internal review or appeal to the tribunal if you disagree.

Throughout, you’re entitled to representation. Many clients ask us to act as agent, manage all correspondence and attend calls, which keeps the process clear and measured.

Your rights and responsibilities

Right to representation: You can appoint us to deal with HMRC on your behalf.
Right to clear information: HMRC should explain what it’s checking and why, and give reasonable time to respond.
Right to ask for written contact: If the check starts by phone, you can request written communication instead.
Duty to keep records: You must maintain complete and accurate records for the statutory period.
Duty to respond on time: Missed deadlines can escalate the check and increase penalties.

Common focus areas we see

Self assessment returns: Property income splits, foreign income, omissions on dividends and capital gains calculations.
VAT: Evidence for zero-rating, partial exemption calculations, and reconciliation of VAT returns to accounts.
PAYE and benefits: Payroll vs RTI discrepancies, P11D benefits, and off-payroll working assessments.
Corporation tax: R&D claims evidence, director loan account entries, and revenue vs capital treatment.
Record consistency: Do bank movements, invoices and ledgers reconcile? HMRC often starts with simple cross-checks.

How to prepare before a check starts

Record-keeping basics: Ensure sales, purchases and bank accounts are fully reconciled, and retain original evidence.
Year-on-year files: Keep a summary pack for each period: signed accounts, tax computations, workings and key contracts.
VAT and payroll reconciliations: Map VAT return figures to the nominal ledger. Reconcile PAYE/NI to RTI submissions.
Diary deadlines: If you receive a notice, log all dates immediately and tell your adviser at once.
Single point of contact: Nominate an internal lead and authorise us as agent so responses are consistent and timely.
Disclosure mindset: If you spot an error, consider an unprompted disclosure. This usually reduces penalties significantly.

If you need hands-on support, our Tax investigation specialists service provides enquiry defence, document reviews and representation.

Reducing the risk of a check

Governance routines: Quarterly reviews: Document director sign-off on VAT returns, RTI submissions and key elections.
Data discipline: System controls: Lock prior periods and keep clear audit trails of adjustments.
Evidence on reliefs: R&D and other claims: Maintain contemporaneous documentation and third-party reports.
Commercial rationale: Transactions with connected parties: Keep board minutes and benchmarking to hand.
Consistent narratives: Financial statements and returns: Ensure notes, computations and disclosures align.

These habits don’t just help with HMRC compliance checks – they also improve forecasting, cashflow and audit readiness.

How we support you

We start with scope, deadlines and the exact documents requested. From there we:

Assess the technical issues: Identify risk areas and quantify any exposure.
Manage correspondence: Draft clear, focused responses and handle follow-up queries.
Prepare for meetings: Brief you on likely questions and provide rehearsals.
Negotiate outcomes: Where adjustments are due, we aim to limit penalties and interest through full cooperation and well-evidenced explanations.
Close-out and lessons learned: We provide a short memo setting out recommended system tweaks to reduce recurrence.

You can also draw on our wider support: self assessment tax services for individuals, and VAT, payroll and corporate tax services for businesses.

Why checks are here to stay

HMRC’s strategy mixes support with enforcement. As mentioned before, the latest Measuring tax gaps release shows the tax gap at 5.3%, or £46.8 billion, for 2023–24. At the same time, the department reports £41.8 billion of compliance yield in 2023–24, up on the prior year’s £34.0 billion. These figures underscore the scale of HMRC’s ongoing compliance activity and the value in getting returns right first time. In our experience, clients who keep robust working papers and respond quickly enjoy faster resolutions and, where adjustments arise, lower penalties. Preparation pays off.

Ready when HMRC calls

A well-run check is about clarity, not confrontation. If HMRC opens a review, bring your adviser in early, gather the records listed in the notice, and keep communications factual and timely. Most HMRC compliance checks are resolved by post and many close with no change when records are complete. Where errors are found, prompt cooperation, clear workings and a reasoned technical position usually produce a fair outcome.

We’ve supported clients across Scotland for over 60 years. If you’ve had a letter or want a pre-emptive health check, we can help you prepare, respond and strengthen your systems for the future. If you’re facing HMRC compliance checks now, contact us for a calm, expert response – get in touch to speak to us today.

Understanding HMRC compliance checks: What to expect and how to prepare