Making Tax Digital for Income Tax started in April 2026 for qualifying sole traders and landlords with gross self-employment and property income over £50,000. If you should already be using the system but are not ready, do not ignore it. You may still have time to sign up, create digital records, choose suitable software and bring your quarterly updates up to date.
HMRC already receives financial information from employers, banks, online platforms, overseas tax authorities and other organisations. The government is now working to improve the quality and consistency of third-party data, including information about bank interest and card sales. This does not mean that every difference proves unpaid tax, but taxpayers should expect HMRC to compare reported figures with information from other sources more effectively.
If HMRC finds an error in a tax return, it may correct the figures, charge additional tax and interest, and consider whether a penalty applies. However, a penalty is not automatic. The outcome depends on the type of error, why it happened, how quickly it was disclosed and how the taxpayer responds.
A discovery assessment allows HMRC to recover Income Tax or Capital Gains Tax that it believes has been underpaid for an earlier tax year. However, HMRC must meet legal conditions and act within the correct time limit. We explain when HMRC can issue an assessment, how far back it can go and what to do if you disagree.
HMRC may ask for bank statements, invoices, contracts or explanations during a tax compliance check. Some requests are informal, while others are formal information notices issued under Schedule 36 of the Finance Act 2008. Understanding the difference matters because formal notices carry legal deadlines, appeal rights and penalties for non-compliance.
HMRC does not rely only on the figures entered on a tax return. It can compare returns with information from employers, banks, letting agents, online platforms, overseas tax authorities and public sources. A difference does not automatically prove undeclared income, but it may lead HMRC to ask questions or open a compliance check.
You can usually attend an HMRC meeting without an accountant or tax adviser. You may also choose not to attend an ordinary meeting. However, attending alone can carry unnecessary risks where HMRC is examining historic errors, undeclared income, overseas matters, large tax liabilities or possible deliberate behaviour.
An HMRC investigation can sound frightening, particularly when much of what people hear comes from rumours, alarming headlines or someone else’s experience. In reality, HMRC enquiries take many forms, and receiving a letter does not automatically mean that HMRC suspects fraud. Understanding the facts can help you respond calmly, protect your position and avoid making the situation more difficult
During a tax investigation, HMRC rarely relies on one document alone. It may compare tax returns, bank transactions, business records, information from third parties, overseas financial data and publicly available material. Understanding how HMRC builds a picture can help taxpayers prepare an accurate response and explain apparent inconsistencies before HMRC draws the wrong conclusion.
How long does an HMRC compliance check take? There is no fixed timeframe. Some checks are relatively straightforward and may be resolved within a few months, while more complex cases can take considerably longer. Find out what affects the duration of an HMRC compliance check, what causes delays, and what you can do to help keep the process moving.
