HMRC’s Structured Risk Reviews: What charities and not-for-profits need to know
6 Nov 2025 • Charities and Not-For-Profits • Charity Tax • Tax Disputes and Investigations • VAT
HMRC has begun rolling out a programme of Structured Risk Reviews (SRRs) across the charity and not-for-profit sectors. This marks a more coordinated approach to compliance, drawing together information across all taxes to build a detailed picture of how organisations operate and identifying any areas of potential underpayment or non-compliance.
Recent correspondence received by several charities indicates that SRRs are being led by HMRC’s Wealthy and Mid-Sized Business Compliance (WMBC) unit and are overseen by a Customer Compliance Manager (CCM). The SRR process can be extensive, covering Corporation Tax, Gift Aid, VAT, and Employment Taxes, as well as governance, internal controls and how charitable funds are managed.
How are organisations selected for an SRR?
HMRC has not publicly released its selection criteria, but early evidence suggests that reviews are informed by data from “Connect”, HMRC’s sophisticated data analytics platform. Connect aggregates data sources such as tax filings, Companies House, Charity Commission returns, banking data, and even open-source information such as websites and social media.
The system identifies inconsistencies or risks, for example:
Mismatches between tax returns and publicly available accounts.
Incorrect data entry in corporation tax or VAT returns.
Complex income structures or overseas transactions.
Large volumes of repayment claims (e.g. for Gift Aid or VAT recovery).
What to expect during a Structured Risk Review
An SRR usually starts with a letter from the assigned Customer Compliance Manager. HMRC will outline the review scope, which often includes:
Corporation Tax and charitable expenditure.
Gift Aid administration and record-keeping.
VAT registration, exemptions and partial exemption methods.
PAYE, benefits, and overseas employment arrangements.
The process typically involves:
An introductory meeting, where HMRC introduces its team and requests background on the charity’s activities, structure and key personnel. This is often a Zoom meeting with 2-3 HMRC staff and key management/personnel.
An information-gathering phase, in which HMRC may issue a detailed schedule of documents and questions, often extending beyond pure tax compliance.
Follow-up correspondence and analysis, which may lead to an expanded compliance check under formal powers.
However, we are increasingly seeing HMRC move straight to the information-gathering phase or even on-site visits, without holding an initial scoping meeting. This can make the process feel more resource-intensive for organisations that have not had time to prepare.
From recent examples, HMRC’s information requests can include:
Copies of trustee minutes, service agreements, and documentation evidencing governance decisions.
Details of funding relationships and agreements, particularly where funds flow through intermediaries or international partners.
Breakdowns of income by source and geography.
Explanations of how charitable funds are applied, such as grants and investments
Documentation on procedures to verify use of payments particularly to overseas bodies.
Bank statements and reconciliations.
“Walkthrough” examples showing how donations are processed from receipt to final charitable expenditure.
HMRC may also ask about investment management, fundraising methods, and relationships with trading or overseas subsidiaries, demonstrating that SRRs are not limited to narrow tax points but examine the whole operating model of the organisation.
Penalties
Once the review is concluded, if inaccuracies are identified in your organisation’s submitted returns, HMRC may impose financial penalties. The level of penalty, if any, depends on the behaviour that led to the inaccuracy in the return, and the level of cooperation shown throughout the review. For UK-related irregularities, penalties can be up to 100% of the tax due.
HMRC may impose penalties for the following reasons:
Late filing of returns and late payment.
Errors in submitted returns.
Failure to notify HMRC of tax chargeability.
Failure to comply with HMRC’s information, inspection, and data-gathering powers.
During its investigation, HMRC will seek to understand how and why any late filing, error, or failure occurred. It will closely examine the underlying behaviour at the time. This behaviour is a key factor in determining whether a penalty should be charged and, if so, the appropriate level.
How Buzzacott can help
HMRC’s Structured Risk Review process represents a significant shift in how compliance is managed across the sector.
Our Charity and Not-for-Profit Tax specialists, Tax Investigations team and VAT team have been assisting clients who have recently received SRR letters and compliance check notices. Early preparation, clear documentation, and coordinated professional advice are essential to navigate these reviews successfully.
We can help you to:
Prepare for initial meetings and brief your senior management and trustees on what to expect.
Review your submitted tax returns and supporting schedules to identify potential inconsistencies.
Should a disclosure be necessary, we’ll present this to HMRC to ensure that you’re treated fairly and proportionately, minimising your potential exposure to unnecessary tax, interest and penalties.
Draft or review responses to HMRC information requests and liaise with HMRC on your behalf or act as an advisor in the background.
Develop a proactive tax governance framework to demonstrate compliance readiness.
Conduct a mock SRR tax audit and provide our recommendations.
Aim to fast track HMRC’s review to resolution and closure of all issues at minimum cost and disruption to you.
HMRC’s Structured Risk Review process represents a significant shift in how compliance is managed across the sector. Early preparation, clear documentation, and coordinated professional advice are essential to navigate these reviews successfully.
If your organisation has received a Structured Risk Review letter, would like to assess your readiness for one or have any questions relating to the above article, please contact a member of our team using the contact form below, and we will be in touch shortly.