Can HMRC check your bank account without your permission?

HMRC can check your bank accounts without your explicit permission. While this may sound alarming, there are safeguards in place to protect your information. But if HMRC feel they have probable cause to investigate, they can check documents like your bank records directly with the third-party. 

Keep reading to understand when, why, and how HMRC might look into your financial records. And what you can do to make sure you’re doing everything by the book. 

In this article we’ll cover the following: 

• Do HMRC check bank accounts?
• What are Financial Institution Notices?
• When would HMRC use a Financial Institution Notice?
• How to make sure you’re following regulation
• Why sole traders should separate their accounts
• Software to help keep track of your accounts

Do HMRC check bank accounts?

HMRC can get relevant information from taxpayers to check they’re paying the right amount of income tax, capital gains tax, corporation tax and VAT.

This information is sometimes held by third parties, and if HMRC wants to see it, they can issue a Financial Institution Notice (FIN) to your bank.

Financial institution Notices are also sometimes known as third party notices.

What is a Financial Institution Notice? 

Since 2021, FINs have allowed HMRC to access information from financial institutions about taxpayers. FINs allow HMRC to go directly to your bank, for example, and request information about your finances. 

And they can do this without your permission. Before FINs, HMRC had to ask for permission from you or a judge to access this information but not anymore.     

If HMRC believe it’s a ‘reasonable request’ as a part of their investigation, they can use a FIN to request your: 

• financial statements
• loan repayments 
• investment information 
• account ownership information

When would HMRC use a Financial Institution Notice?

FINs are tools for tax investigations. They’re typically used if HMRC believes someone is evading tax, but they’ll sometimes be used in cases of bankruptcy and debt collection too. 

There are a few different reasons why HMRC might want to investigate your financial information: 

• inconsistencies in your Self Assessment – if the figures you submit to HMRC don’t match your industry, lifestyle, or previous returns they may investigate further
• whistleblower – you can be reported by if someone believes you’re evading tax 
• random checks – HMRC will occasionally do random checks on taxpayers as a part of their audits 

Certain industries are more likely to be investigated, such as retail businesses with high cash turnover, freelancers, hospitality businesses, and construction and trades businesses.

HMRC investigations – make sure you’re following regulation

Because HMRC can randomly check your business’s financial records, it’s important to keep detailed records. Good financial habits like regular bookkeeping and having clear records of your company’s expenses will be crucial if you need to provide evidence to HMRC. 

Here are a few tips to try and avoid mistakes that could lead to an HMRC investigation: 

• keep detailed records – accurate records of your business’s income and expenses will help avoid any discrepancies in your tax return 
• file on time – sometimes a late filing is enough for HMRC to take a look at your records 
• be honest with expenses – don’t stretch the limit of allowable expenses and only claim for valid reasons

Why sole traders should separate their accounts 

Because there’s no legal distinction between you and your business as a sole trader, you’ll need to pay particular attention to your tax returns. 

If you end up being investigated by HMRC, your personal assets could be at risk if you haven’t kept accurate records to demonstrate your business income and expenses.

Plus if HMRC notice discrepancies in your accounting, you could be fined for not following regulations.  

HMRC bank account savings tax warning

New rules plan to make it easier for HMRC to collect tax on savings directly from people’s bank accounts.

From April 2027, savings providers will be asked to provide new and existing customers’ National Insurance numbers to HMRC.

This is to allow HMRC to take action against savers who have gone over their personal savings allowance (£500 for basic rate taxpayer and £1,000 for higher rate taxpayers).

Can HMRC check my bank accounts? 4 key takeaways

1. HMRC can check your bank account without your permission by using a Financial Institution Notice.
2. HMRC checks of personal bank accounts can be triggered by inconsistent tax returns or reports by whistleblowers.
3. Industries at higher risk of an HMRC investigation include freelancers, businesses that turnover a lot of cash, plus trades and construction businesses.
4. Accounting software, separate bank accounts, and detailed records can reduce the chances of HMRC needing to check your bank account.

HMRC and personal bank accounts FAQs

Can HMRC access my bank account without permission?

Yes, HMRC can check your bank account without your permission. If HMRC has a good reason to investigate your finances, they can check your records directly with your bank.

What triggers HMRC to check bank accounts?

HMRC checks bank accounts if they have reason to believe that someone is evading tax. Inconsistencies in your tax return, being reported by a whistleblower, or random checks are all triggers for HMRC to check personal bank accounts. You may also have your bank account checked by HMRC if you’re declared bankrupt.

Will HMRC tell me if they check my bank account?

Yes, it’s highly likely that HMRC will inform you if they’re investigating your finances and need to check your bank account.

Can HMRC take money from my account without my permission?

Yes, in some circumstances HMRC can take money directly from your bank account. HMRC can take money from your account without permission if you owe more than £1,000 in unpaid tax and haven’t responded to them on several occasions. However, they’re required to leave at least £5,000 across your accounts.

More small business guides

• What is Making Tax Digital?
• What is IR35?
• A guide to Self Assessment tax returns for the self-employed
• What does business insurance cover?