Answers · UK 2025/26
What is the difference between an HMRC compliance check and a tax investigation?
An HMRC compliance check is a routine or targeted review of specific aspects of your tax affairs — often triggered by anomalies. A full tax investigation (enquiry) examines your entire return. Compliance checks are more common, less intrusive, and usually resolved faster. Both require a professional adviser.
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**Compliance checks** HMRC compliance checks (also called aspect enquiries or targeted checks) focus on a specific element of your return — for example, unusual expense claims, a large capital allowance claim, or a jump in turnover. HMRC opens the check with a letter asking for supporting information or documents. They are less disruptive than a full investigation, typically resolved within a few months, and often closed once the taxpayer provides satisfactory evidence. **Full tax investigation (enquiry)** A full enquiry examines your entire tax return and underlying records. HMRC can open an enquiry into any return within: - **12 months** of the filing deadline (if filed on time) - **12 months of actual filing** if filed late - Up to **4 years** for innocent errors - Up to **6 years** for careless errors - Up to **20 years** for deliberate non-compliance or fraud **What triggers an investigation?** - Random selection (HMRC uses Connect data analytics to identify anomalies) - Unexplained lifestyle inconsistent with declared income - Discrepancy between self-employed income and bank deposits - Industry norms: returns significantly out of line with similar businesses - Tip-off from a third party - Platform data (eBay, Airbnb, Etsy — HMRC receives seller data from platforms) **The Code of Practice 9 (COP9)** For suspected serious tax fraud, HMRC uses COP9 — a formal civil investigation of fraud. Accepting COP9 and making a full disclosure (Contractual Disclosure Facility) avoids criminal prosecution. Refusing can lead to criminal investigation. **What to do** 1. Do not ignore HMRC contact — respond within the stated time limit 2. Engage a tax adviser immediately (accountant or tax specialist) 3. Do not provide information beyond what is requested 4. Keep all correspondence in writing **Costs** Defending an investigation can cost £2,000–£10,000+ in professional fees. Fee protection insurance (often available via your accountant) covers this cost.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.