HMRC Compliance Check 2026: What It Is and How to Respond

What Is an HMRC Compliance Check?

An HMRC compliance check -- sometimes called a tax enquiry or tax investigation -- is a formal process by which HMRC examines one or more of your tax returns to verify that the figures are correct. Compliance checks can affect individuals, sole traders, partnerships, limited companies, and trusts.

HMRC selects returns for compliance checks through a combination of risk profiling, computer analysis (their Connect system), and random selection. Receiving a compliance check letter does not necessarily mean HMRC suspects you of wrongdoing -- some checks are routine. However, you should treat every compliance check seriously and respond correctly from the outset.

The letter you receive will typically cite legislation under the Taxes Management Act 1970. For Self Assessment returns, the relevant power is usually Section 9A (individual returns) or Section 12AC (partnership returns). For employer PAYE and payroll matters, HMRC uses a separate employer compliance review process.

Types of HMRC Compliance Check

HMRC compliance checks fall into three broad categories, each with different scope and implications.

Process check (or routine check)

A process check is the lightest form of enquiry. HMRC typically asks a small number of factual questions or requests copies of specific documents -- for example, asking you to confirm a particular income figure or clarify an entry on your return. These checks are often resolved quickly, sometimes within weeks, if you provide clear and accurate information.

Aspect enquiry

An aspect enquiry focuses on a specific area of your return. Common subjects include:

• Property rental income and expenses
• Business expenses claimed by self-employed individuals
• Capital gains and the annual exempt amount
• Pension contributions and relief at source
• Employment income and benefits in kind

HMRC will tell you which aspect they are looking at. You only need to provide information relevant to that specific area. If during the check HMRC uncovers concerns in other areas, they can widen the scope -- but they must tell you if they intend to do so.

Full enquiry

A full enquiry covers your entire tax return for the year in question. These are more intensive and can involve multiple rounds of information requests, meetings with HMRC officers, and review of underlying business records. Full enquiries are more common where HMRC has identified significant risk factors or where a previous enquiry revealed serious errors.

HMRC Time Limits for Opening Enquiries

Understanding the time limits is important because it tells you how far back HMRC can reach.

For Self Assessment returns filed on time, HMRC must open an enquiry within 12 months of the filing deadline -- so for the 2024/25 return (filed by 31 January 2026), HMRC would normally need to open any enquiry by 31 January 2027.

Extended time limits apply as follows:

• 4 years -- where a return was not submitted or there was an innocent error or incomplete disclosure
• 6 years -- where there was a careless error (you failed to take reasonable care)
• 20 years -- where there was a deliberate error or fraudulent conduct

For offshore matters -- income or gains linked to overseas accounts, property, or entities -- HMRC has additional powers and can in some cases go back 12 years even for careless errors.

If you receive a compliance check letter that appears to relate to a return outside the normal 12-month window, you should always check whether HMRC has correctly applied the extended time limit. A tax adviser can challenge an out-of-time enquiry notice if the circumstances do not meet the legal threshold for the extended period.

Your Rights During a Compliance Check

Many taxpayers feel anxious when they receive an HMRC compliance check letter and respond in a way that is either overly accommodating or unnecessarily defensive. Understanding your rights helps you respond appropriately.

Right to representation

You have the absolute right to appoint a tax agent -- an accountant, tax adviser, or solicitor -- to act on your behalf throughout the enquiry. Once you appoint a representative, HMRC should communicate through them rather than directly with you. If the amounts at stake are significant, professional representation is strongly advisable.

Right to know the scope

HMRC must tell you what they are looking into. If an initial letter is vague, you can -- and should -- ask HMRC to clarify the specific issue or return year they are examining. You are not obliged to volunteer information outside the stated scope of the enquiry.

Codes of Practice

HMRC operates under published Codes of Practice for more serious enquiries:

• Code of Practice 8 (COP 8) applies to enquiries involving suspected tax avoidance -- for example, use of artificial tax schemes
• Code of Practice 9 (COP 9) applies to enquiries where HMRC suspects deliberate tax fraud. Under COP 9, you will normally be offered a Contractual Disclosure Facility (CDF) that gives you the opportunity to make a full disclosure in exchange for civil (rather than criminal) treatment

HMRC Charter

HMRC has a published Charter committing to treat taxpayers fairly, explain their decisions, and act with integrity. If HMRC fails to meet these standards -- for example, by being unreasonably slow or making factually incorrect statements -- you can submit a formal complaint and ultimately escalate to the Adjudicator's Office or Parliamentary and Health Service Ombudsman.

What HMRC Can Ask For

Under Schedule 36 of the Finance Act 2008, HMRC can issue information notices requiring you to produce documents and provide information relevant to the enquiry. These notices can be used to request:

• Bank statements and financial records
• Business accounts and bookkeeping records
• Invoices, contracts, and receipts
• VAT records
• Property purchase and sale documents
• Records of overseas income and assets

HMRC can also, in some cases, approach third parties -- banks, employers, letting agents -- for information about you. They can use data from their Connect system, which cross-references information from Land Registry, Companies House, DVLA, social media, and overseas tax authorities.

You can appeal against an information notice if you believe it is disproportionate, if the information requested is not reasonably required, or if the notice is out of time.

How to Respond to an HMRC Compliance Check Letter

Step 1: Read the letter carefully

Identify exactly which tax return year and which aspect HMRC is questioning. Note any deadline given for your response.

Step 2: Gather your records

Pull together all records relevant to the specific query -- invoices, bank statements, receipts, or whatever is requested. Good record-keeping is your best defence.

Step 3: Decide whether to use a professional

For a simple process check with a clear factual answer, you may be comfortable responding yourself. For aspect or full enquiries, or any enquiry involving significant sums, engage a tax adviser before you respond.

Step 4: Respond clearly and accurately

Answer only what is asked. Do not volunteer additional information that HMRC has not requested. If you are unsure whether information is relevant, ask your adviser. Responses should be factually accurate -- providing incorrect information, even unintentionally, can worsen your position.

Step 5: Keep copies of everything

Retain copies of all correspondence and documents you send to HMRC. If a dispute escalates to tribunal, your paper trail is essential.

Penalties -- What HMRC Can Charge

If a compliance check reveals that you underpaid tax, HMRC will issue an assessment for the additional tax plus interest. They may also charge a penalty. The penalty percentage depends on the behaviour that caused the error and whether disclosure was prompted or unprompted.

Interest on late paid tax runs from the date the tax was due. For 2026/27 the HMRC interest rate is linked to the Bank of England base rate plus 2.5 percentage points.

Early disclosure, genuine cooperation, and prompt payment all reduce the final penalty. If you believe you have been overcharged, you can appeal to the First-tier Tax Tribunal.

Closing a Compliance Check

A compliance check closes when HMRC either issues a closure notice (confirming no further tax is due or stating the additional tax charged) or when you successfully appeal against the enquiry notice. HMRC must close the enquiry within a reasonable time, and you can apply to the Tax Tribunal for a direction requiring HMRC to close if you believe they are taking unreasonably long.

Once a compliance check is closed for a particular year, HMRC cannot generally reopen an enquiry into the same return -- though they retain the right to open enquiries into other years or to pursue fraud through criminal proceedings in exceptional circumstances.

If you want to understand the potential cost of an underpayment -- including interest and penalties -- use the CalcHub Self Assessment Tax Calculator to estimate your baseline liability and see how much an adjustment to your figures might change what you owe.