What does the HMRC investigate?

What does the HMRC investigate?

Let’s face it. The thought of being investigated by HMRC can be scary, especially if you have never been investigated. But don’t worry! We are here to help you understand how HMRC investigations work and what they involve.

Below is everything you need to know about HMRC investigations and what they actually investigate:

HMRC investigations are similar to criminal investigations in that they involve an investigator looking for evidence of wrongdoing. However, unlike criminal investigations, HMRC is not looking for evidence of wrongdoing on your behalf. They are only looking at whether a person the organization has already audited broke any rules concerning their dealings with HMRC.

What triggers an investigation?

HMRC can’t come after you unless they have evidence against you. And they don’t have much time or resources to investigate every little thing. So, if they’re investigating someone who made a mistake on their tax return, for example, there’s a good chance they’ll just send them a letter asking for more information about the situation.

The agency might be forced to investigate your business or you in the following instances:

  • Unusual records in your taxes
  • A whistleblower has reported tax evasion to HMRC concerning you or your business
  • Submitting wrong figures when filing your returns
  • You work in a high-risk industry that is on HMRC’s radar. For instance, if your business handles a lot of cash in hand.
  • Notable inconsistencies with your earnings. For example, a big increase or fall in your income
  • Your returns do not match the industry trend of your business

What does the tax investigation entail?

An HMRC audit is an intensive, detailed review of an individual’s or organization’s tax affairs. It usually involves a formal assessment by HMRC of the tax position and a series of interviews with individuals responsible for managing the affairs. The aim is to determine whether any person or organization has failed to comply with the law. A formal assessment can also address specific issues raised in an audit report.

HMRC tax investigation entails investigation to determine the following:

  • Evasion of VAT
  • Evasion of PAYE and NIC
  • Evasion of Income Tax
  • Tax avoidance schemes
  • Avoidance of employer’s contributions

What kind of taxes are investigated?

HMRC investigates the following types of taxes:

  • VAT
  • Capital gains
  • Corporate taxes
  • IR35
  • Construction Industry Scheme

Hence, you should always take the assistance of HMRC civil tax investigation services in the UK like Kangs Solicitors. They will help you through your case as quickly and efficiently as possible. 

How far does the HMRC audit go?

The HMRC investigates to the best extent possible, but it doesn’t exceed four years. However, if they are convinced that you have committed tax fraud, they can go as far back as 20 years!

For example, if you have been evading VAT on your business transactions deliberately, they will investigate how much of that you have been doing for 20 years. If they find out that you were doing it in the past and not paying VAT until now, you are liable for all the money stolen from the government.


There you have it! You now know what an HMRC tax audit entails and what triggers it. Consider hiring a professional tax fraud lawyer if you have more questions or need assistance concerning your investigation.

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