This is a question we often come across in our practice and the answer may surprise you: YES. HMRC can look into your bank account without your permission.

Since 2021, HMRC has had in fact  the power to contact your bank directly if they suspect something isn’t quite right with your taxes. They don’t need to tell you first or get approval from a judge. If they believe it’s reasonable, they can request your bank statements, loan details, investment information, and more. This is done through what’s called a Financial Institution Notice.

HMRC might decide to check your account if your tax return doesn’t seem to match your income or lifestyle, if someone reports you for suspected tax issues, or simply as part of a random check.

This can happen to anyone, but sole traders should be especially careful. If your personal and business finances are mixed together, your entire account could be reviewed.

How to Stay Compliant

To stay on the safe side, make sure you keep accurate records of all business income and expenses. Filing your tax returns on time and being realistic and honest with any claims is also essential.

Using simple accounting software can help you stay organised and reduce the chance of mistakes.

If you’re self-employed, having a separate bank account for your business is a smart move. It helps keep things clearer and shows you’re handling your finances responsibly.

For more information or any concern, speak to your accountant or tax advisor  or feel free to get in touch with us. We offer a free initial consultation and are happy to help.