A compliance check, sometimes called an aspect enquiry, is HMRC’s most common form of investigation. Rather than reviewing your entire return, HMRC focuses on one or more specific areas: a particular expense claim, a rental income figure, a property transaction, or a discrepancy they have identified from third-party data. The letter you receive will usually specify what HMRC is looking at and what information they need from you.
These checks are not random. HMRC opens them because something has triggered their attention. That trigger might be a discrepancy between the income you declared and information HMRC holds from letting agents, Land Registry, banks, or other sources. It might be an expense claim that appears disproportionate to income. Or it might be a property transaction that was not followed by a CGT return. Understanding what triggered the check helps determine how to respond.
Do not ignore the letter. HMRC will escalate if you do not respond, and silence is treated as non-cooperation which affects the penalty position. Do not respond in haste without understanding exactly what HMRC is asking for and why. The information you provide becomes part of the case. Do not provide more information than is specifically requested without first considering the implications. This is not about withholding anything — it is about responding accurately and proportionately. Everything you say in response to HMRC is on the record.
We review the compliance check letter and assess what HMRC is asking for and why. We review the relevant section of your tax return and the supporting records to establish whether the position is correct or whether there is an error. We prepare a clear, accurate, and proportionate response to HMRC’s queries. We manage the correspondence through to resolution and, where an error is identified, we negotiate the penalty position to achieve the best outcome the facts support.
Where a compliance check identifies an error, penalties may apply. The level depends on the nature of the error. Genuine mistakes with full cooperation can result in suspended or zero penalties. Careless errors typically attract penalties of 0 to 30 per cent of the additional tax, depending on cooperation. The distinction between a genuine mistake and carelessness depends on the care a reasonable taxpayer would have taken in the circumstances. We advise on the penalty position throughout the process and ensure the disclosure quality maximises the available penalty reduction.
Send us the letter from HMRC. Do not respond to HMRC until we have reviewed it.
We review the letter, the relevant section of your return, and the supporting records.
We prepare and submit the response to HMRC on your behalf. We handle all correspondence from this point.
HMRC reviews the response. If they have further questions, we manage those too. When the check is resolved, we confirm the outcome and any adjustments.
Book a free 30-minute consultation to discuss your property tax position with a specialist accountant.
