Most HMRC pain is self-inflicted—not by fraud, but by delay, messy records, and the wrong first reply. In this in-depth interview, Chris Worden sits down with Salman Ammoir, ex-HMRC investigator and founder of ADL Tax, to uncover what truly triggers an HMRC investigation and how business owners can protect themselves.
- HMRC uses advanced data and AI to spot inconsistencies.
- Triggers include mismatched records, late filings, and unexplained income.
- Nudge letters are common—don’t ignore them.
- Specialist advice is crucial for complex cases.
- Don’t give HMRC more than they’re entitled to.
- Disclosure processes can mitigate penalties.
How HMRC Picks Up on Issues
HMRC’s Connect system and AI analyse data from multiple sources—property records, bank data, and international exchanges. If your tax return doesn’t match up with this data, you could be flagged for investigation. Human intelligence, such as tip-offs or inspectors noticing irregularities, also plays a role.
Common Triggers for HMRC Investigations
- Undeclared property income
- Mismatched VAT or turnover figures
- Repeated late filings or compliance failures
- Overdrawn directors’ loan accounts
- Unexplained bank transactions
- Participation in avoidance schemes
Nudge Letters and Disclosure
Nudge letters are HMRC’s way of prompting taxpayers to come forward about potential issues. If you receive one, seek advice immediately. Disclosure processes allow you to regularise your affairs, often with reduced penalties if handled correctly.
Specialist Advice: When and Why
Chris Worden and Salman Ammoir agree: if you get a letter from HMRC, speak to a professional. Not every case needs a specialist, but for complex or high-value matters, expert guidance can make a significant difference—especially with serious investigations like Code of Practice 8 or 9.
What Not to Do with HMRC
- Don’t volunteer more information than required.
- Don’t agree to unrealistic payment plans just to get HMRC off your back.
- Don’t rely solely on AI or online forums for advice.
- Don’t ignore letters or deadlines.
Key Takeaways
- HMRC’s data-driven approach means inconsistencies are quickly spotted.
- Seek professional advice—don’t go it alone, especially for serious matters.
- Understand your rights: HMRC isn’t entitled to everything they ask for.
- Disclosure and cooperation can reduce penalties and stress.
- Chris Worden’s advice: act early and don’t bury your head in the sand.
Frequently Asked Questions
- What triggers an HMRC investigation?
- Common triggers include mismatched data, undeclared income, late filings, and suspicious transactions.
- What is a nudge letter from HMRC?
- A nudge letter is a prompt from HMRC suggesting you may have undeclared income or errors in your tax affairs.
- Should I respond to HMRC myself or get advice?
- It’s best to seek professional advice, especially if the issue is complex or involves large sums.
- What is the difference between COP8 and COP9?
- COP9 is for suspected tax fraud with immunity from prosecution if you fully disclose; COP8 is for complex cases without suspected fraud.
- Can HMRC ask for my personal bank statements?
- Only if they have a lawful reason—don’t provide more than they’re entitled to without advice.
Need Help with HMRC?
If you’ve received a letter from HMRC or are worried about an investigation, contact us for confidential advice.
