Receiving a letter from HM Revenue and Customs about a tax investigation can cause concern, especially when your Self Assessment tax return is also due. You may be unsure what figures to enter, which records HMRC may check or whether information in your new return could affect an existing enquiry.
The main point is that an HMRC investigation does not normally remove your duty to file a Self Assessment tax return. If HMRC requires a return, you still need to deal with the relevant filing date unless HMRC tells you otherwise.
For taxpayers in Leeds, careful preparation becomes particularly important when an investigation and a tax return overlap. Your return should agree with the records you hold, and any errors from earlier years may also need attention.
What Is a Self Assessment Tax Investigation?
HMRC may check a Self Assessment return when it wants to confirm that the information reported is correct.
HMRC commonly refers to this process as a compliance check or enquiry. The scope can vary. HMRC may look at one particular part of a return, or the review may cover a wider part of a person’s tax affairs.
For example, HMRC may ask about rental income reported by a Leeds landlord. It may review sales and expenses declared by a sole trader. It could also request information about income that appears to be missing from a return.
A check does not automatically mean that HMRC has decided you deliberately reported something incorrectly. HMRC may be trying to establish whether the figures and tax treatment are right.
However, every request should be taken seriously.
Can You Still File a Tax Return During an HMRC Investigation?
In many cases, yes. An investigation into an earlier return does not normally mean that you should stop filing later returns. Each tax year has its own reporting duties.
Suppose HMRC is checking information from your 2024/25 return while you are preparing the 2025/26 return. You may still need to submit the later return by its normal filing date.
For the 2025/26 tax year, which ended on 5 April 2026, the normal online Self Assessment filing deadline is 31 January 2027. Tax due through Self Assessment is also normally payable by that date.
Ignoring the new return because an earlier year is under review can create another problem. A late return may result in penalties even though another tax matter is already being discussed with HMRC.
Why Consistency Between Tax Years Matters
HMRC may compare information across tax years.
Large changes do not automatically mean something is wrong. Business income can rise or fall. A landlord may sell a property. A freelancer may lose a major client. Investment income can also change.
Still, figures should have a clear basis.
Suppose a Leeds sole trader reported £70,000 of turnover one year and £35,000 the next. There may be a genuine commercial reason. However, records should support the amount reported.
The same principle applies to expenses. If one category changes greatly from the previous year, keep the invoices, receipts and other evidence behind the figure.
When an Tax Investigation Leeds is already taking place, checking consistency before filing becomes even more important.
Check Your Records Before Completing the Return
A Self Assessment return should be based on records rather than estimates wherever accurate figures are available.
The documents needed depend on how you earn your income.
A sole trader may need sales records, invoices, receipts and bank statements. A landlord may need rental statements, property expense invoices and finance records. Someone with employment income may need employment and tax information. Investors may need dividend statements, interest records and details of relevant asset disposals.
HMRC requires taxpayers to keep records needed to complete an accurate tax return.
If an investigation is taking place, do not alter records to make them match figures already reported. Work from the original information and identify any genuine differences.
What If You Find an Error in an Earlier Tax Return?
Finding an error during preparation of a later return can be uncomfortable, but ignoring it may create further issues.
The first step is to establish what happened.
An error might involve omitted income, an expense claimed incorrectly, a duplicated figure or a misunderstanding of a tax rule. The way it should be corrected can depend on the tax year, the type of error and whether HMRC has already opened an enquiry.
HMRC allows online Self Assessment returns to be amended within the relevant amendment period. Once that period has passed, another correction route may be required.
If HMRC is already checking the year concerned, making changes without considering the existing enquiry can complicate matters. It is sensible to establish the correct figures and the appropriate way to disclose the issue.
Do Not Ignore HMRC Letters
HMRC correspondence normally explains what it is checking and what information it wants.
Read the whole letter carefully.
Check the tax year, the response date and the documents requested. HMRC may ask for records linked to a particular entry on the return rather than every financial record you hold.
Missing a response date can make matters harder.
If you cannot provide certain records, do not invent replacements. Establish what information exists and explain the position where required.
Keep copies of letters, documents and information sent to HMRC. You should also keep a record of relevant telephone discussions, including the date and the main points covered.
Taxation Services Leeds for More Involved Tax Returns
A person facing an HMRC enquiry may also have several types of income to report on the next return. In that situation, Taxation Services Leeds from Tax Consultant can assist with reviewing tax records, preparing Self Assessment figures and considering how the current return relates to matters already being examined by HMRC. This can be useful for Leeds landlords, sole traders, contractors and business owners who need to deal with their filing duties while keeping the figures consistent with supporting records.
How Tax Advice Can Reduce Filing Errors
Many Self Assessment errors happen because the taxpayer does not know where a figure belongs or how a particular cost should be treated.
For example, a sole trader may treat a personal purchase as a business expense. A landlord may use the wrong tax treatment for property costs. Someone with several sources of income may accidentally leave one out.
A tax adviser can review the underlying records before preparing the return.
This is particularly useful during an HMRC check because a new error could create more questions. The aim should be to submit figures that can be supported by the documents behind them.
Tax advice may also help identify information that needs further checking before submission rather than discovering the issue after filing.
Allowable Expenses Need Supporting Records
Claiming business expenses can reduce taxable profit, but the expense must meet the relevant tax rules.
For a self-employed person, HMRC generally looks at whether a cost was incurred wholly and exclusively for the purposes of the trade, although specific rules apply to different types of expenditure.
Not every payment from a business bank account is automatically deductible.
Personal spending should not be claimed simply because it passed through the business account. Where expenditure has both business and private elements, the tax treatment needs to be considered carefully.
Records should support the amount claimed.
This becomes particularly important if HMRC asks why an expense appears on the return.
What Happens If HMRC Finds Additional Tax Due?
An investigation can end in several ways.
HMRC may accept that the original return was correct. It may decide that additional tax is due. In some cases, the taxpayer may have paid too much.
Where additional tax is due, HMRC may also consider interest and penalties.
The penalty position depends on the circumstances. HMRC distinguishes between different types of behaviour, including a failure to take reasonable care, deliberate errors and deliberate errors that were concealed.
Whether the taxpayer told HMRC about the issue before HMRC discovered it can also affect how penalties are considered.
This is one reason why inaccurate information should not be sent simply to meet a response deadline.
Keep Filing and Investigation Records Separate
Organisation matters when several tax years are involved.
Create separate records for each tax year. Keep the documents relating to the HMRC enquiry apart from the records being used to prepare the current return.
For example, if HMRC is checking 2024/25 while you are filing 2025/26, use separate folders for each period.
This reduces the risk of using an invoice, income figure or expense in the wrong year.
Digital records can also be organised by year and category. Clear file names can save time when you need to locate a document requested by HMRC.
Watch the Self Assessment Deadline
An HMRC investigation can take time, but your next filing date may arrive while discussions are still taking place.
For the 2025/26 tax year, the normal deadline for an online return is 31 January 2027.
If you miss the Self Assessment filing deadline, an initial late filing penalty of £100 can normally apply. Further penalties can arise if the delay continues.
Late payment is a separate matter and can result in interest and further charges.
Therefore, an ongoing enquiry should not be treated as a reason to forget the next return.
Should You File Early During an Investigation?
There can be good reasons to prepare the return well before January.
Early preparation gives you time to compare the figures with previous years, find missing documents and check anything that may overlap with the investigation.
It also gives you more time to calculate the expected tax bill.
You do not normally have to wait until January to submit an online return. Once the tax year has ended and the information needed is available, preparation can begin.
For someone already dealing with HMRC, leaving the return until the final days can add unnecessary pressure.
Be Careful With Estimates
Sometimes a taxpayer does not have a final figure when preparing a return.
HMRC rules allow provisional or estimated figures in certain circumstances, but they need to be handled correctly. You should not simply guess a figure because records are missing.
If a provisional figure is used, the return should identify it where required, and the final amount should be provided when available.
During an investigation, unsupported estimates may lead to further questions.
Check bank statements, invoices, third-party records and other available evidence before deciding that a figure cannot be established.
Prepare Before You Respond to HMRC
A tax investigation and Self Assessment filing can overlap, but they should be handled carefully rather than treated as one task.
Start by identifying which tax year HMRC is checking. Read the request and gather the records connected with it. At the same time, keep preparing any later tax return that is due.
Check income, expenses and other taxable amounts against supporting documents. If you discover an earlier error, establish what happened before deciding how it should be corrected.
Most importantly, do not allow an ongoing investigation to make you miss another Self Assessment deadline.
For Leeds taxpayers, keeping each tax year organised and ensuring that reported figures are supported by records can make it much easier to deal with both the return and HMRC enquiries.
