HMRC Tax Investigation: What Happens When Your Self Assessment Tax Return Is Checked?

Receiving a letter from HMRC saying your Self Assessment tax return is being investigated is the last thing you want. Have you made a mistake? Will you face a penalty?

And it’s not uncommon for HMRC to question tax returns. In 2024/25 alone, HMRC contacted 243,000 individuals, asking them to check or amend Self Assessment returns from previous years that it believed were incorrect or missing.

The good news is that an HMRC tax investigation doesn’t automatically mean you’ve done anything wrong.

Here’s why HMRC might check your return, what happens during an investigation and how to prepare.

What Is an HMRC Tax Investigation?

Put simply, an HMRC tax investigation is a check to make sure you’ve declared your income correctly and paid the right amount of tax.

This could involve a routine compliance check, a formal Self Assessment enquiry or a wider investigation.

Formal enquiries may focus on one part of your return (an aspect enquiry) or examine it more broadly (a full enquiry).

Why Might HMRC Investigate Your Self Assessment Tax Return?

There are several reasons why HMRC might take a closer look at your return. Perhaps something doesn’t quite add up, an expense claim needs explaining or the figures don’t match information HMRC already holds.

Sometimes, returns are simply selected at random. So, receiving an enquiry letter doesn’t necessarily mean there’s a problem.

What Happens When HMRC Starts an Investigation?

Although every case is different, an HMRC tax investigation will usually follow these stages.

1. HMRC contacts you or your accountant. HMRC will normally write to you or your authorised accountant explaining that a check is taking place.
2. HMRC explains what it wants to check. HMRC should explain what it wants to look at and which documents you’ll need to provide.
3. You provide the requested records and explanations. You may need to supply invoices, bank statements, accounts or other supporting evidence.
4. HMRC may ask follow-up questions or arrange a meeting. If HMRC has more questions, it may ask for additional records or arrange a call or meeting to talk things through.
5. HMRC reviews the evidence and reaches a conclusion. HMRC will explain the outcome, including whether any tax adjustments are needed.

What Should You Do If You Receive an HMRC Tax Investigation Letter?

First things first, don’t panic, but don’t ignore the letter either. Take time to read it carefully, check which tax year HMRC is looking at and make a note of when you need to respond.

Gather the relevant records, keep copies of correspondence and ask for clarification if anything is unclear. You may also want an accountant to review your response before submitting it.

How Far Back Can HMRC Investigate Your Self Assessment Tax Return?

For an on-time Self Assessment return, HMRC normally has 12 months from receiving it to open a formal enquiry.

Different deadlines apply to late or amended returns. HMRC may also investigate earlier years under separate rules, including discovery assessments, particularly where tax has been underpaid.

In other words, just because you’ve passed the usual 12-month window doesn’t mean HMRC can’t look into an earlier tax year.

What Documents Can HMRC Ask You to Provide?

HMRC may request tax returns, business accounts, invoices, receipts, bank statements or records relating to rental and other taxable income.

The information requested should be relevant to checking your tax position, and HMRC’s powers are subject to legal safeguards.

What Happens If HMRC Finds an Error?

If HMRC finds a mistake, what happens next will depend on the circumstances.

If you’ve paid too little tax, you’ll usually need to pay the difference, plus interest. You could also face a penalty, depending on how the error happened and how you respond to HMRC.

However, if you’ve overpaid, you could be entitled to a refund.

And if you disagree with HMRC’s findings, you may have the right to request a review or appeal.

How Long Does an HMRC Tax Investigation Take?

Unfortunately, there’s no set answer. Some HMRC checks are fairly straightforward, while others can take months or longer, particularly if several tax years or complicated records are involved.

Providing accurate records promptly may help avoid delays. Remember, the deadline for opening an enquiry is different from the time HMRC takes to complete it.

Can an Accountant Help With an HMRC Tax Investigation?

Absolutely. If you’re unsure what HMRC is asking for or worried about making a mistake, getting an accountant involved can take some of the pressure off.

They can check your records, help you prepare a response and deal with HMRC on your behalf.

They can also explain potential tax adjustments, penalties and appeal options, helping you manage the investigation with greater confidence.

Get Professional Help With an HMRC Tax Investigation

Nobody wants to receive an investigation letter from HMRC. But knowing what to expect and having the right support can make the whole process much easier to manage.

Whether you’ve received an enquiry letter or simply have concerns about your Self Assessment return, DNS Accountants can help you understand your options and decide what to do next.

Book a consultation or contact us today on 033 0088 3616 or email [email protected].

About the author

Owais Bombaywala
Working closely with individuals and businesses to help grow their business requires a significant amount of experience and industry knowledge. Owais is BA (Hons) Accounting and Finance and Member of ACCA. Besides being a compliance champion, he specialises in Property tax planning. With over 7 years of experience in Accountancy and Tax world, our clients count on us to give them timely and up to date advise to help them make the right move. Owais works closely with some of the DNS’s most valued clients to give them the confidence they need to focus on their business. He is known for his calm nature and proactive approach. At DNS, we proud to be a modern and client centric firm. Our advise doesn’t just look at what’s best for your business moreover our aim is to help you achieve your personal goals. Away from work, he resolve family disputes and provide care and support to elderly people. He is a founding member of Human welfare organisation Hounslow.