Detailed information on what to expect when being investigated by HMRC for tax fraud.

HMRC Fraud Investigations: What to Expect

The Process of an HMRC Fraud Investigation

Staffed by some of HMRC’s most experienced investigative officers, the Fraud Investigations Service Unit (FIS) is responsible for both civil and criminal investigations in the UK, though the vast majority of its cases are now civil.

Initial contact with those under scrutiny is typically made via letter, stating the legal basis for the investigation under the Finance Act 2007[1]Trusted Source – GOV.UK – Finance Act 2007 and other relevant statutes.

What to Expect During an FIS Investigation?

HMRCs fraud investigation process typically involves:

  1. Extensive document requests (financial records, correspondence, contracts, etc.)
  2. Interviews with relevant personnel (accountants, advisors)
  3. Detailed review of financial affairs to identify discrepancies or irregularities
  4. Potential on-site visits to business premises
  5. Scrutiny of tax returns and accounts
  6. Questions around sources of income, asset holdings, and business structures
  7. Potential for large tax, penalty and interest assessments if irregularities are found
  8. Possibility of criminal prosecution in cases of suspected serious tax fraud

If HMRC finds discrepancies that suggest intentional fraud, the penalties can be severe, ranging from heavy fines to criminal prosecution. Under the Fraud Act 2006[2]Trusted Source – GOV.UK – Fraud Act 2006, serious cases can result in imprisonment.

During an investigation, businesses have certain rights, including the right to legal representation and the right to appeal against decisions. It’s crucial to engage with legal professionals who advocate on behalf of the business.

HMRC FIS has requested a meeting, what should I do?


How often does HMRC conduct random audits?

HMRC randomly selects businesses and individuals for audits to ensure compliance with tax laws. The frequency of these audits isn’t publicly specified, as HMRC uses a variety of methods and criteria to select cases that may include risk-based approaches.

Penalties for tax fraud can vary widely, from fines and surcharges to criminal prosecution for severe offences. The specific penalty depends on the nature of the fraud and whether it was deemed a result of negligence or deliberate action.

It is possible to discuss findings and disputes with HMRC during an investigation. Many issues can be resolved through dialogue, especially if discrepancies are due to misunderstanding or error. Legal or financial advisors can aid in these negotiations.

Ensuring accurate and timely submission of tax returns, maintaining detailed financial records, and consulting with tax professionals for compliance are effective steps to minimize the risk of an investigation.

While HMRC does not explicitly target specific sectors, businesses dealing with complex tax arrangements, large sums of cash transactions, or those in sectors with high levels of previous non-compliance (such as construction or restaurant industries) may face more scrutiny.


The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.

You can learn more about our standards for producing accurate, unbiased content in our editorial policy here.

  1. Trusted Source – GOV.UK – Finance Act 2007
  2. Trusted Source – GOV.UK – Fraud Act 2006