When to Refer to a Tax Investigation Specialist

Not every HMRC case belongs in general practice. HMRC is expanding its compliance teams and leaning harder on data, which means more enquiries and closer scrutiny ahead, including for clients whose affairs look perfectly in order. The practical question is when to keep an investigation in-house, and when to refer it to a tax investigation specialist.

A routine compliance check or aspect enquiry is ordinary work, a full investigation isn’t: it runs to its own rules and exposes inexperience quickly. 

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Why investigation work is on the rise

HMRC has put serious money into compliance, it collected £24.2 billion in compliance yield in the first nine months of 2025 to 2026 and is recruiting another 5,500 compliance caseworkers. Much of the work is now driven by data, with HMRC matching information from banks, registries and online platforms before an officer makes contact.

It is not only the obvious targets being caught, on HMRC’s own figures, around 31% of the tax gap comes down to people failing to take reasonable care rather than to fraud. As one tax litigation partner put it, firms can expect “deeper scrutiny, more enquiries, and an increasingly active HMRC.” A careful client with a messy return can still find themselves under investigation.

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Signs it is time to refer

Refer to a tax investigation specialist when any of the following apply:

• ‍Suspected fraud or a COP9 letter - Code of Practice 9 and the Contractual Disclosure Facility carry criminal consequences if mishandled, and how you respond at the outset can shape the whole case.
• ‍Multiple years or multiple taxes - Cases spanning several tax years, or several taxes at once, where the facts are tangled and the sums are large.
• ‍Any criminal exposure - HMRC criminal investigations brought 103 charging decisions and 46 prosecutions in the last quarter of 2025 alone. This is not something to take on for the first time on a live case.‍
• A finely balanced disclosure - Voluntary disclosures where the route you choose, and how you present it, change what the client ends up paying.‍
• Time you cannot bill - A case quietly eating unbillable hours and pulling the practice off the work it should be doing.

If two or more of these apply, an HMRC investigation referral is usually the right call, and the sooner it happens the better.

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Risks of handling it yourself

Keeping a case in-house to protect the relationship is understandable, but the handling is where it tends to go wrong. Penalties and settlements often turn on the detail: how the disclosure is built, the questions answered, the negotiation run. Without real experience, the final bill, and the client exposure behind it, can be far higher than it needed to be. HMRC also wins more than 70% of cases that reach the courts, and as much as 93% at the First-tier Tribunal. A specialist will often narrow HMRC’s focus, agree the scope and keep an enquiry from widening, which is far harder once early ground has been conceded.

Then there is your own exposure, standards for advisors in the UK are tightening. As of May 2026, advisors who deal with HMRC now must register and meet minimum standards, and can be sanctioned where their conduct “falls below the standards that might reasonably be expected of a tax adviser.” Running an investigation you are not equipped for is exactly the risk that regime targets. Bringing in a specialist tax advisor for accountants reads as competence.

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Will referring cost you the client?

This is a reason why referrals get delayed, with the right partner, the answer is no.

We work on a white-label basis. You stay the lead advisor and the client’s main point of contact, while we handle the investigation in the background and keep you updated throughout. You stay copied into the correspondence, and nothing reaches your client without you seeing it first. We are not trying to win the client over to us. The point is to hand them back to you in better shape than the day the letter arrived.

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What to look for in a tax investigation specialist

Not all specialist firms are the same. Before you refer, check that:

• senior people do the actual work
• their hands-on experience of UK HMRC investigations is recent
• process and fees are clear from the start
• they commit to leaving the wider client relationship to you

Referred at the right time, the case gets the handling it needs and your client stays yours.

To see how our HMRC investigation referral process works for accountants, including how we keep you updated and protect your client relationship from the first letter through to resolution, get in touch.