Tax Investigation Service.

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Bring your tax investigation to a prompt and painless resolution.

Tax investigation. A pair of words guaranteed to strike fear into even a seasoned veteran of business. We understand how daunting and stressful this can be. Being selected for an HMRC investigation doesn’t always mean you’re at fault. However, it is up to you or your PEM tax investigation specialist to prove this.

A savvy response to an investigation is the secret to minimising the time and hassle of it. It will also make sure you don’t pay any unnecessary penalties or get involved in a lengthy process that might not be justified or necessary.

We’re here to help you understand exactly what such an investigation involves by explaining the jargon, spelling out your responsibilities as a taxpayer and shouldering the burden of the response for you with the full might of our experience and technical knowledge.

So, why don’t you let us to take it from here?

What is a Tax Investigation

What is a tax investigation?

“[A taxpayer] is entitled to arrange his affairs so as to reduce his liability to tax” – Lord Wilberforce (WT Ramsay v HMRC, House of Lords).

The tax investigation process allows HMRC to identify errors in tax returns, recoup any money owed and stop people getting away with submitting fraudulent claims.

Every year, there’s a ‘tax gap’ – the difference between the tax that should be collected and the amount that’s received. It’s HMRC’s job to make sure this gap is as small as possible. Last year HMRC calculated a £35.5 billion shortfall. More than half of missing tax is usually traced back to small businesses and individuals via tax investigations, with a significant proportion of the tax loss being from innocent error.

So, if you’re the recipient of a tax investigation notice, a tax inspector is going to be delving into your records to work out if you’ve underpaid your tax.

What’s put your tax return on HMRC’s radar?

When it comes to the scrutiny of HMRC, nobody is exempt. Individual taxpayers, business owners, sole traders and directors of limited companies could all find tax returns under HMRC inspection.

But still, you’re probably wondering, out of the 12 million plus returns HMRC receives annually, why have they selected yours for an investigation?

Tax on payments

Common prompts for a tax investigation

Late returns

Consistently filing returns late

Changing information

Changing information in a filed return

Late payments

Regularly making late tax payments

Random selection

Being selected at random for investigation


Tip-offs from members of the public

Rejected information

Your return doesn't reflect information held by HMRC


Inconsistencies in your records or behaviour that raises HMRC’s suspicions (e.g. a large rise in costs or fall in income)

High-risk sector

Working in a high-risk sector (e.g. cash trades) or an industry HMRC is proactively targeting

Received an official notice?

Contact our team of tax investigation specialists to help you to review your tax position, identify any shortfalls, and respond appropriately.

Get advice

What happens in a tax investigation?

Tax inspectors have the right to dig into the details of your tax return to make sure you’re paying the right amount of tax. The process is complicated and how we respond will depend on several factors:

Type of investigation

It is not always obvious what type of investigation you are facing. Is the notice a ‘nudge’ to encourage you to comply or are they actively launching an investigation?

The extent of the investigation

Are HMRC examining a particular aspect of your tax return, or is everything under scrutiny?

What happens in a tax investigation
HMRC tax investigation

The two main types of formal HMRC tax investigation

The type of investigation provides the biggest indication of how complicated the process might be.

1. An aspect investigation

HMRC suspect there is a specific inaccuracy on your self-assessment tax return. The inspector will want to check the records associated with this part of your tax return.

2. A full investigation

In a full investigation, every element of your tax return can be examined in detail. In short, the inspector may ask for all records for the tax year in question.

Informal HMRC notices to encourage compliance

Not every HMRC brown envelope will be a notice of an impending investigation. If you receive any of the notifications below, HMRC have flagged you for some reason. The good news is they’re giving you an opportunity to avoid a full investigation.

HMRC notices

What happens next?

Contact a PEM tax investigations specialist to help you respond appropriately. Our experts will use their knowledge to help you respond, and minimise any associated penalties.

Let us explain

You’ve received an HMRC letter – what should you do next?

Your PEM tax investigation specialist will help you understand why HMRC has launched an investigation.

The first thing you should expect from a tax investigation is a request for information, documents and records. But the response to this is far from straightforward.

What is a Tax Investigation
Letter from HMRC

How can PEM help?

Our tax investigation specialists will help you cut through any jargon and respond directly to HMRC for you.

In short, when you appoint our tax investigation services, you get the full might of our experience and technical knowledge to bring your tax investigation to a prompt resolution.

Speak to one of our Tax Investigation experts