What happens during an HMRC investigation? 

Posted: 2nd September 2026

You’ve just received a tax investigation letter from HMRC. You’re either part of the 7% that’s subject to a random spot check, or the 93% where HMRC has found a discrepancy and needs to investigate. What do you do now? 

Here, we’ll look at the HMRC investigation stages, including triggers that can lead to an investigation, the different types or enquiries, what actually happens during the process and what your potential outcomes might look like. 

How an investigation starts

Firstly, HMRC will usually contact you or your accountant by post when it comes to investigations. Any emails or texts claiming to be about an HMRC investigation should be treated with caution. If you suspect something’s not quite right or that someone’s trying to scam you, report it.

Next, don’t panic. Read the letter in its entirety and check for authenticity (the official HMRC logo, the unique tax reference number or your National Insurance number should match your personal documents, for example). 

Make sure you understand what documents are needed and any deadlines given before you start contacting HMRC. Minor discrepancies can cause HMRC to launch enquiries and while things may be resolved quickly, it’s at this point that you may want to look for representation in the form of a tax advisor. 

What types of HMRC enquiries are there?

A routine enquiry

This is just HMRC’s standard review process to check you or your business are paying the correct amount of tax.

An aspect enquiry

During an aspect enquiry, HMRC will look into one or two specific areas of your return. This might be a capital allowance, a suspicious expense or an omission of the former. 

A full enquiry 

Full enquiries tend to be raised when HMRC notices significant discrepancies or suspects high risk. This will be a full deep dive into your tax returns, accounts and any other associated financial documents. 

What triggers an HMRC investigation? 

There are a range of reasons HMRC might have to investigate you. Occasionally, they’ll give no reason at all. 

These reasons include, but are not limited to: 

You’re part of a spot check

As we mentioned, you might just be part of the 7% of people/businesses that are spot-checked by HMRC. The chances are slim, but it does happen. 

A tip off 

Members of the public can tip off HMRC if they suspect something like money laundering or fraud. 

Late tax returns 

If you consistently file your tax return late, HMRC is going to want to know why. 

Discrepancies between tax returns

Your income may have fallen dramatically, for example. HMRC may raise enquiries if there are big changes year on year. 

Your standard of living isn’t reflective of declared income 

If the books in your business aren’t quite adding up with your lifestyle, HMRC has a responsibility to check what’s going on.

What happens during an HMRC investigation 

It’s at this stage of the proceedings that having professional representation can be invaluable. They can help you prepare all the correct and relevant information required by HMRC.

Information gathering 

Once you’ve confirmed the investigation is taking place, you’ll need to provide any information HMRC has requested within a timely manner. HMRC will generally give you a deadline to submit all the relevant information. 

This information will include things like financial documents, digital records, and some information about your lifestyle. If you believe and can demonstrate the information is ‘not reasonably required’, you may be able to push back. 

HMRC can’t ask you for any private correspondence between you and your legal representatives. They can also only review existing documents and can’t ask you to create new ones for the purposes of the investigation. 

Meetings with HMRC

During some investigations, HMRC will request meetings with the taxpayer. These meetings generally aren’t compulsory for most enquiries, but if you’re invited to one, it might be to discuss the following: 

• The details of a business, including how the books are kept
• Find out more details about private financial affairs outside a business 
• HMRC giving you the reasons they’ve raised the enquiry 
• To give you a chance to disclose any known discrepancies or inaccuracies 
• Agree follow up actions, any further information needed or a settlement if it’s appropriate

How long does a tax investigation take? 

The length of the HMRC investigation process is very dependent on the complexity of the issue they’re investigating, and how quickly you can supply information when asked. 

Aspect enquiries are generally solved within a 3-6 month period. Full investigations generally take 9-16 months, but more challenging investigations can last between 18-24 months. 

Potential outcomes from an HMRC investigation 

No change to tax position

If, at the end of the investigation, everything is as it should be, there will be no change to your tax position.

Underpaid tax

If you’ve knowingly or unknowingly underpaid your tax, you’ll have to pay anything owed (plus interest) within 30 days. 

Penalties can be incurred if HMRC believes you knowingly underpaid, though these penalties can often be suspended, with HMRC setting suspension conditions for the taxpayer for an agreed length of time. 

Overpaid tax 

These enquiries are usually more straightforward to resolve. If HMRC finds you’ve actually overpaid your tax, you’ll receive a tax rebate with any interest. There are no penalties incurred. 

When penalties aren’t suspended 

If, during the course of the investigation, HMRC decide there’s been deliberate evasion or fraud, you’ll be charged with a penalty. This is different to ‘careless’ behaviour, which HMRC defines as an ‘honest mistake caused by a lack of care’. Deliberate behaviour may be escalated to criminal proceedings depending on the seriousness of the offence. 

The severity of the penalty is dictated by several factors like: 

• The reason you underpaid and how much you underpaid by 
• How quickly you made HMRC aware of any mistakes (if you did it voluntarily at all)
• How co-operative you are through the course of the investigation

HMRC will generally try to keep things to civil penalties, but it’s still possible to go to prison for tax offences. Where HMRC finds deliberate fraud or evasion, they will likely prosecute, especially when large amounts of money are in play. 

When to seek specialist support 

Specialist support and representation can make all the difference during the HMRC investigation process, particularly in complex cases; needing to look through extended periods of accounts, offshore accounts for example. If you’re under investigation for deliberate fraud or evasion, you should seek out the appropriate counsel to be there for any meetings. 

Your tax specialist can advocate for you if they believe HMRC are asking for information that’s not reasonable or relevant, and provide support during any meetings required. 

If you need a trusted tax specialist in your corner, NHD Tax Solutions will be with you throughout the process. Contact us for support today.