HMRC Investigations & Enquiries
- Ish Mukit
- Jul 30
- 2 min read
Updated: Oct 7
By July 2025, HMRC has begun analysing the data submitted since the start of the new tax year. This includes VAT returns, payroll records and quarterly reports. This is a key period when the department identifies anomalies or patterns that warrant closer inspection.
It’s an ideal time to ensure everything filed so far in 2025/26 is accurate and consistent. While most businesses will never face a full audit, HMRC investigations can arise from even small discrepancies or late filings, and understanding how they begin is the best way to stay prepared.
HMRC Investigations
HMRC carries out investigations to make sure that individuals and businesses are reporting the correct amounts of income and tax. These checks can range from routine compliance reviews to more detailed enquiries where records and explanations are required.
Common triggers include:
Expense claims that seem unusually high compared to industry averages.
Differences between VAT, payroll, and Self-Assessment data.
Late or missed submissions that flag risk in HMRC’s system.
Unexplained changes in turnover or profit.
Information from banks, property records or third parties that doesn’t match declared figures.
In 2025, HMRC has expanded its use of data analytics and artificial intelligence to spot irregularities faster. Even minor rounding differences can prompt a follow-up if they appear across multiple returns.
How it impacts you
An HMRC investigation can be disruptive for any business. It often requires detailed explanations of income, expenses and record-keeping practices, sometimes going back several years. The process can delay refunds, pause repayments, and create uncertainty while the review is ongoing.
Beyond the administrative strain, investigations can impact reputation and confidence. Suppliers, lenders and clients may become cautious if your accounts are under review, even if everything is above board. There can also be indirect financial effects such as time lost responding to queries, or the cost of professional support if you need representation.
However, most enquiries are resolved quickly when businesses have accurate, well-organised records. In many cases, HMRC simply seeks clarification rather than alleging wrongdoing. Being transparent and prepared makes the process much smoother.
What you can do
The best defence against an HMRC investigation is prevention:
Maintain clear records: Keep digital copies of invoices, receipts and bank statements. HMRC requires records to be retained for at least six years.
File on time: Submit Self-Assessment, VAT and PAYE returns before deadlines to avoid attention.
Be consistent: Ensure figures across all submissions align (e.g. income tax, VAT and payroll).
Avoid inflated claims: Only claim business expenses that are fully and exclusively for business use.
Review regularly: Carry out quarterly reviews with your accountant to correct errors before HMRC spots them.
If HMRC does contact you, respond promptly and professionally. Most enquiries can be resolved quickly with good communication and proper documentation.
At Ledgr Accountants, we support clients through every step - from proactive compliance to managing correspondence. Our aim is to make even complex situations stress-free, transparent, and manageable.
Ish Mukit
Senior Accountant
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