HMRC compliance checks are rising – Are you protected against a tax investigation?

With HMRC investigation activity set to climb sharply over the next four years, it is important that businesses and individuals prepare themselves for the risk of an unexpected tax enquiry.

Whilst ensuring that your tax returns and other submissions to HMRC are accurate and error-free is one form of protection, many taxpayers also choose to invest in a tax investigation service, which will cover the fees of an enquiry should something go wrong.

HMRC is cracking down

HMRC’s most recent figures put the UK tax gap at £46.8 billion for the 2023 to 2024 tax year.

Small businesses alone account for around 60 per cent of that figure, the largest share of any taxpayer group.

With the gap holding at 5.3 per cent of total tax due, the Government’s attention on tax compliance has stepped up significantly.

At the June 2025 Spending Review, the Government allocated £1.7 billion to HMRC over four years to recruit 5,500 additional compliance staff and 2,400 debt management staff.

The investment is expected to raise an additional £7.5 billion in tax revenue per year by 2029 to 2030.

How will this affect me?

The practical effect for taxpayers is straightforward. The number of compliance checks, enquiries and investigations will rise.

Many of those will land on businesses and individuals who have done nothing wrong. A compliance check does not always mean you have done something wrong, but it can still be long, stressful and expensive even where no additional tax turns out to be due.

Enquiries can run for months or years and the professional fees involved can quickly reach into the thousands. Early, experienced representation is what shortens the process and protects your position.

Case study

One example of how fee protection has worked for a business was when HMRC opened an enquiry into the company’s tax return. The enquiry lasted 2 years with various requests for information and data from the client during that time. Fees were requested at several points during the investigation and were authorised to enable their accountant to continue to deal with the enquiry on their behalf. The enquiry was concluded with no amendments being made to the return. The total fees on this claim amounted to £19,000, which were paid in full.

How can Kirk Newsholme help with a tax investigation?

Our tax investigation service is designed to take the pressure off the client from the moment HMRC opens an enquiry.

HMRC deals directly with the firm rather than the client, ensuring that the matter is managed professionally from day one.

By signing up to our service, you gain access to fee protection of up to £100,000, as well as access to a number of other benefits.

This cover gives you peace of mind that, if HMRC opens an enquiry into your personal or business affairs, the cost of professional representation is covered.

Cover applies to enquiries into Corporation Tax, Income Tax, VAT, PAYE and CIS among others. It can, under the right circumstances, extend to individual directors who are also subject to a tax enquiry.

If you don’t already have this protection in place or if your current policy is coming to an end, our service can offer you peace of mind.

If you are contacted by HMRC, please make sure you speak to our firm at the earliest opportunity rather than responding directly to the tax authority.

To find out more about our tax investigations services, please speak to June Gleeson at June.gleeson@kirknewsholme.co.uk or DD 0113 204 4242