An HMRC compliance check letter means HMRC wants to check that your return is right: in its own words, that you are “paying the right amount of tax at the right time” and “getting the right allowances and tax reliefs”. It is not an accusation, and most checks end without drama, but how you handle the first response shapes everything that follows. The short version: do not ignore it, do not ring HMRC unprepared, and send it to your accountant the day it arrives.
What the letter will say
The opening letter names the return or period being checked and what HMRC wants, usually alongside factsheet CC/FS1a. HMRC says “when we start the check, we’ll tell you what we need from you”: typically records, an explanation of specific entries, or both. The scope may be one entry or the whole return; our guide to aspect vs full enquiries explains why that difference matters less than it looks.
Do I have to deal with HMRC myself?
No. HMRC’s own guidance confirms “you can ask someone else to deal with us on your behalf, for example, a professional adviser”. For anything beyond the trivial, an accountant should handle the correspondence: precision in the first reply matters, and volunteering more than was asked is a common and expensive mistake.
Do I keep filing and paying during the check?
Yes. HMRC is explicit that you must “continue to send returns or make payments during this compliance check, if they’re due”. Falling behind during a check makes everything worse.
Does cooperating actually reduce penalties?
Yes, materially. If additional tax is due, the penalty percentage depends partly on the quality of your cooperation: HMRC states that if you “do everything you can to assist us, we’ll reduce the penalty by the maximum amount possible”. That covers what you disclose, help with calculations, and access to records. Cooperation is not the same as capitulation; you can assist fully while your adviser contests points that are wrong.
How does a compliance check end?
HMRC “will either send you one or more ‘decision notices’ or agree a contract settlement”: an assessment for extra tax, a penalty notice, or a letter saying no changes are needed. Decision notices carry appeal rights. If HMRC asks for documents formally along the way, that happens under Schedule 36, which has its own limits and appeal routes.
What does a compliance check cost me?
If your affairs are right, usually nothing in tax, but the accountant’s time answering HMRC is billed regardless of the outcome. That is the gap tax investigation insurance closes: see who pays the accountant in an HMRC enquiry, or get a quote.