The self-assessment tax system is heavily reliant on the honesty of taxpayers who are responsible for completing their tax returns accurately and on time.

However, with such a system, errors will understandably be made. That includes honest mistakes and some which are not quite so genuine.

HMRC carries out compliance checks on a proportion of returns to check their accuracy. Some checks will be completely random, while others will be made on businesses operating in ‘at risk’ sectors or where prior risk assessments have been conducted.

It’s important to note that compliance checks are an important part of HMRC’s work, so it does not necessarily mean something is wrong. However, only a small proportion of self-assessment compliance checks are carried out at random, so you should prepare yourself for what lies ahead.

What Should Taxpayers Expect?

It is HMRC’s policy to inform taxpayers when they have been selected for a compliance check of their affairs. HMRC will also tell the taxpayer of the type of checks it wants to carry out, whether it’s the complete return or just one element of it. The taxpayer can then decide whether to appoint an accountant or tax adviser to deal with the compliance check on his or her behalf.

As part of the compliance check, HMRC will ask for certain information or documents from the taxpayer. Only information which is reasonably required to carry out the necessary checks should be requested. It may also want to visit the business’s premises or ask questions over the phone.

What are Your Rights?

It is in the interests of the taxpayer to cooperate with HMRC’s checks and to provide the information that’s requested in a timely manner. Helping HMRC with its enquiries in this way may help to reduce any penalties if errors are found. However, taxpayers are not legally obliged to cooperate with HMRC and their rights will be explained to them if they choose not to do so.

The taxpayer is also legally entitled to ask for more time to comply with requests for information and documentation. In some cases, HMRC may ask for information which is not relevant to the check, in which case the taxpayer can ask for the check to stop or appeal to the tribunal.

If HMRC finds that errors have been made, it will work with the taxpayer to put the errors right. It will also collect any additional tax payments and interest due and may apply a penalty.

Need help?

If you have questions about HMRC compliance checks and you need help, simply call 08000 746 757.