HMRC has extensive powers to enquire into your Self-Assessment tax returns. They can also open compliance checks outside of enquiries, including by sending nudge letters and opening investigations opened under Codes of Practice 8 and 9. Every compliance check should be handled with care and consideration, or you risk adverse financial and reputational impacts.

HMRC can assess and collect tax liabilities going back 20 years if you have made a ‘deliberate’ error or if you failed to notify HMRC of a liability to tax. Even if there has been no deliberate conduct, HMRC can go back 12 years if the issue in question involves an offshore matter. This is restricted to 6 years for domestic matters caused by carelessness and HMRC can go back 4 years if it identifies a mistake in your tax affairs not involving carelessness. 

If HMRC finds an error in your tax affairs, they will consider whether they can charge a penalty. The penalty regime is now extremely complicated, with different penalties chargeable depending on the issue. There are statutory minimum and maximum penalties for each behaviour and regime. Significant reductions are available if you voluntarily disclose errors in your tax affairs and cooperate with HMRC throughout the enquiry process. 

HMRC has also introduced a “name & shame” regime to deter deliberate tax evasion. The names of people who have evaded their tax liabilities deliberately are released on its website.

We are experts in understanding HMRC’s compliance check powers and the multiple penalty regimes. If you have been notified of a compliance check by HMRC, or are in an ongoing tax dispute, get in touch today for specialist support.