Some self-employed individuals sometimes face sudden tax audits, often for no single fixed reason.

Sometimes HMRC suspects that inaccurate tax returns can trigger serious tax investigations.

Once the lengthy investigation begins, it will be complicated and a headache for self-employed bosses.

What triggers a tax investigation

In most cases, a tax investigation is usually triggered when HMRC believes there is a tax problem with a business. Only a small percentage of cases are triggered randomly. That is, it may be checked even if there are no problems.

When you submit your tax form, please be careful to fill in any details to avoid deviations to reduce the risk of being checked to a certain extent.

It is especially important to note that when there are any unusual fluctuations in your turnover or profits, it is better to do a self-examination rather than be seen as an anomaly by HMRC.


 Some other situations are also subject to frequent tax investigations:

  • Late tax return or late tax payment
  • Significant differences in revenue return, such as a sudden drop in revenue or an increase in costs
  • Have an offshore bank account
  • Merchants who often accept cash payments
  • Reported by someone 

Therefore, do not miss any info that could go wrong to ensure that HMRC receives the correct amount.

Once triggered, what happens?

If told that a tax investigation is required, all records are taken and questions are raised based on the records.

The tax investigation general survey will investigate a year’s accounts and determine the level of penalties based on the answers.

If the mistake is judged to be careless or unintentional, there may be some relief from the penalty.

Once the error is determined to be deliberate deception, it will be the highest level of 100% fine.

There may be times when a check can be triggered without finding any issues, and there is no penalty.


“What should I do if I am subject to a tax investigation?”

Usually the tax investigation process starts with receiving a letter informing the merchant or business that a specific section of the tax return or that it will undergo a comprehensive tax inspection.

If you are not sure if this is from a real motive (such as impersonating the tax office to commit fraud), please contact your accountant immediately.

Usually accountants need to check the company’s accounting records to better analyze the problem, which can save a lot of time during tax review.

Some mistakes are often caused by inadvertent negligence, and as long as the inspector provides true and accurate information, the tax inspection will be concluded sooner.

Finally, never lie or destroy evidence. Doing so will face heavier penalties and multiply the time and experience it takes.

Therefore, if you encounter any problems, please consult a professional accounting team for a quick solution. If you have other questions, you can also leave a message for help.