Concluding the compliance check

By Tolley in association with Emma Broadbent of Grant Thornton

The following Owner-Managed Businesses guidance note by Tolley in association with Emma Broadbent of Grant Thornton provides comprehensive and up to date tax information covering:

  • Concluding the compliance check
  • Prior to closure
  • Contract settlements
  • Closure of compliance check by closure notice
  • Closure notice where no agreement reached
  • Interest

Note: This guidance note uses the term compliance check in line with HMRC’s current terminology. However, the term ‘enquiry’ is still used in the legislation referenced.

HMRC will close a compliance check into a tax return once it has successfully addressed the perceived risks (with or without the agreement of the taxpayer / adviser). These risks will normally have been identified before the check began and as the check progresses. Following Finance (No 2) Act 2017, HMRC and taxpayers may resolve and close individual aspects, by way of a partial closure notice (PCN), whilst leaving other matters open. When all issues are resolved, a final closure notice is issued. Prior to F(No 2)A 2017, it was only possible for HMRC to issue a final closure notice once all matters were complete.

HMRC may have found nothing wrong with the tax position being checked or may have found an inaccuracy. During the check HMRC should normally have asked for interim payments of late paid tax and Class 4 national insurance contributions if applicable and considered the position regarding interest and penalties.

If the check is closed without any inaccuracy being identified, HMRC must send a final notice to the taxpayer that the check is complete.


If the compliance check has been carried out on the telephone, the HMRC officer should confirm closure as part of the call. It is good practice to ask for confirmation of this in writing and HMRC should always write to a taxpayer or adviser if requested. However, a formal check should only be concluded via a closure notice, contract settlement or settlement deed.

Where an inaccuracy has been identified, checks to self assessment returns will be closed either through an invitation to amend the tax return and a final / PCN through a contract settlement or a settlement deed. On the closure of a partnership compliance check,

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