Tax investigations are often a stressful experience – there’s no denying that.

But a significant part of that stress can come from uncertainty, especially if you’re not familiar with the investigation process.

Understanding what to expect in the event that you’re contacted about an HMRC investigation can put you in a much better position to handle it.

How do HMRC investigations work?

In the first stage of an investigation, HMRC will contact you with a query about your accounts. At this point, you can choose to put them in contact with us, so we can liaise with them on your behalf.

They will require certain information from you depending on what the inquiry is about, including copies of any information that’s missing on your tax return.

How long do investigations take?

There’s no strict answer to this, as the length of time an investigation takes can depend on how severe or complex it is, and the size and type of business involved.

According to the Federation of Small Businesses, investigation of a single aspect of taxation can take between 3 and 6 months, while a full investigation lasts 16 months on average.

How far back can an investigation go?

HMRC will begin by looking at the tax period that’s relevant to the issue they’re investigating, to find out if tax has been under- or overpaid.

If they find a mistake has been made, they can normally look into your tax affairs for up to 4 years ago.

However, this can extend to 6 years if the mistake was made because of careless behaviour, and up to 20 years if they believe it was deliberate.

3 tips for surviving an investigation

Respond promptly

When you’re faced with the prospect of a tax investigation, you might be tempted to put off dealing with it, especially if you’re already busy with other priorities.

It’s important to respond as soon as possible, though. HMRC usually set a time limit of 30 days to get back to them with the information they’ve requested, so you should leave yourself enough time to gather the records you need.

Be honest

HMRC considers your co-operation and honesty when deciding on penalties, so it’s always best to own up if you realise you made a mistake.

Help them where you can and provide the records they ask for, and they’re more likely to be lenient in the event that you end up with a fine.

Keep your returns accurate

In an ideal scenario, you’d be able to avoid an investigation in the first place.

One way to minimise your chances of being targeted for one is by making sure your accounts and tax returns are completed accurately, and meeting your deadlines for filing.

Get in touch

You don’t have to handle the stress of a tax investigation alone. We can handle it on your behalf or support you with any aspect you need.

We also offer fee protection insurance to protect you against any unexpected fees.

Contact us to find out how we can help you manage an HMRC investigation.