HMRC has a period of 12 months to raise formal enquiries into the tax return submitted. Under the self-assessment system, this can range from routine audits (such as on VAT), although these are generally unlikely in relation to corporation and income tax where HMRC may enquire and mount detailed technical challenges over the treatments adopted in the tax return.
Where an audit is initiated, HMRC will establish contact to request a visit to the premises and for access to tax records. In relation to tax investigations, it generally begins with HMRC informing that a particular aspect of the tax return is being enquired into and that it intends to carry out an investigation.
Enquiries are often settled between the taxpayer and HMRC by exchange of information and correspondence. Litigation may be necessary in cases where an agreement cannot be reached.