10 Myths About HMRC Investigations – What Greater Manchester Businesses Really Need to Know
If you run a business in Rochdale, Oldham, Bury, or anywhere across Greater Manchester, the words “HMRC wants to check something” tend to spike the blood pressure.
Most founders assume that HMRC contact means trouble, punishment, or a sign that they’ve done something wrong.
The reality is far less dramatic – but far more technical.
HMRC ran 316,000 compliance checks in 2024/25. Many were routine. Some were random. And others were triggered by third-party data HMRC receives automatically from banks, payroll systems, digital platforms, Companies House, and overseas institutions.
So, let’s strip away the fear and deal with the facts. Here are 10 of the biggest myths we see across the SME world – and the reality behind each one.
Myth 1: “If HMRC contacts me, I’ve done something wrong.”
Reality:
HMRC runs both risk-led and random checks.
A compliance check does not automatically imply suspicion, wrongdoing, or fraud.
Common triggers include:
- Mismatches between returns and third-party data
- Late filings or late payments
- High-risk sectors (construction, hospitality, trades)
- Unusual swings in income, expenses, or VAT claims
What this means for Rochdale businesses:
Construction firms in Middleton, tradespeople in Oldham, and hospitality owners in Bury are statistically more likely to see queries simply because their sectors have more cash movement and higher variance.
Not because they’re doing anything dodgy.
CCM advice:
Stay organised. Keep digital records up to date. If you’re selected, stay calm – the selection itself means nothing.
Myth 2: “If HMRC accepted the return, they can’t revisit it.”
Reality:
HMRC can review earlier years within statutory time limits, depending on behaviour:
| Tax Type | Normal | Careless | Deliberate |
| Income Tax & Corporation Tax | 4 years | 6 years | 20 years |
| VAT | 4 years | — | Up to 20 years (dishonest conduct) |
“Accepted” just means HMRC didn’t raise questions at that moment.
What this means for you:
Keep supporting evidence for at least six years.
VAT-sensitive businesses (retailers, café owners, trades) should keep records longer.
CCM advice:
Don’t panic about the time limits – but don’t throw anything away early.
Myth 3: “An HMRC investigation means people turning up on site.”
Reality:
Most checks are done by correspondence.
HMRC may ask for:
- Bank statements and reconciliations
- Expense evidence
- VAT invoices
- RTI payroll submissions
- Clarification of entries
Site visits usually only happen in complex or high-risk cases.
What this means for you:
If you’re running a small CIC in Rochdale or a sole-trader joinery firm in Littleborough, the odds of an on-site audit are tiny.
CCM advice:
Answer promptly, keep it factual, and don’t overshare. We handle these for clients weekly.
Myth 4: “Any mistake equals a fine.”
Reality:
Penalties depend entirely on behaviour under Schedule 24 of the Finance Act 2007:
- Careless – didn’t take reasonable care
- Deliberate – knew it was wrong
- Deliberate and concealed – intentionally hid it
Penalties for careless errors can be suspended if you improve systems or staff processes.
What this means for you:
If you’re a reasonable person running a reasonable business, honest mistakes aren’t crimes.
CCM advice:
Transparency, clear evidence, and early disclosure always reduce risk.
Myth 5: “HMRC can ask for anything they want.”
Reality:
A valid HMRC request must be:
- Relevant
- Proportionate
- Legally grounded
- Clear about what period and information is required
You can ask HMRC to clarify if a request is vague.
What this means for you:
You don’t have to drown HMRC in unnecessary paperwork.
CCM advice:
Push back politely when needed. Scope matters.
Myth 6: “I can digitise receipts later – that’s good enough.”
Reality:
HMRC expects accurate, timely, contemporaneous records.
Examples of expectations:
- VAT: digital invoices & payment evidence (MTD rules)
- PAYE: keep payslips, P11D data, RTI submissions
- Corporation Tax: contracts, ledgers, source evidence
Late reconstruction undermines credibility.
What this means for you:
If you’re using Xero or FreeAgent (most CCM clients are), use the app properly – don’t save a carrier bag of receipts for April.
CCM advice:
Record as you go. It saves hours and avoids issues.
Myth 7: “Only big companies get investigated.”
Reality:
HMRC uses nationwide risk analytics covering every UK business, large or small.
They analyse:
- Company accounts
- VAT & CT returns
- PAYE and CIS filings
- Companies House data
- Bank & overseas reports
What this means for you:
Your turnover doesn’t matter – your consistency does.
CCM advice:
Keep filings aligned across all platforms. Don’t say one thing to HMRC and another to Companies House.
Myth 8: “If HMRC finds an error, penalties can’t be reduced.”
Reality:
Penalty reductions depend on:
- Disclosure quality (unprompted is best)
- Cooperation
- Timeliness
- Clarity
A well-managed disclosure can dramatically reduce penalties.
What this means for you:
Don’t hide. Don’t delay. Don’t improvise.
CCM advice:
Get professional support early. It pays for itself.
Myth 9: “HMRC investigations are adversarial.”
Reality:
HMRC’s compliance process is structured and methodical, not combative.
Stages usually include:
- Notice of compliance check
- Information request
- Review, queries, discussion
- Outcome – advice, amendment, or closure
You can also request an internal review or appeal.
What this means for you:
Most cases resolve through clear communication, not courtroom drama.
CCM advice:
Stay calm. Stay factual. You don’t need to “win” – you need to be clear.
Myth 10: “Once it’s closed, that’s it – I can forget about it.”
Reality:
HMRC expects improvement.
Repeat the same mistake later? Penalties increase.
After-action steps include:
- Updating procedures
- Improving internal controls
- Staff training
- Monthly reconciliations
- Better record-keeping workflows
What this means for you:
The end of an enquiry is the start of stronger systems.
CCM advice:
Future-proof your processes. It’s cheaper than repeat issues.
Compliance Without Fear: The CCM Approach
At CCM, we handle dozens of enquiries each year for local SMEs, charities, and CICs around Rochdale, Oldham, Bury, and across Greater Manchester.
The pattern is always the same:
- The fear at the start is much worse than the enquiry itself.
- Clear records make everything faster.
- Calm, organised responses bring quick closure.
- Most issues are procedural, not criminal.
If you receive a letter, a nudge notice, or an information request, don’t sit on it and don’t panic.
Handled properly, HMRC compliance checks are simply another administrative process.
Handled poorly, they become expensive.
If HMRC Has Contacted You, We’re Here When You Need Help
Carter Collins & Myer | Accountants & Tax Advisors
Chichester House, 2 Chichester Street, Rochdale OL16 2AX
01706 868010 | www.uk-ccm.com
Calm, experienced support – from a local firm that knows how HMRC really works.
