An expert has issued a warning as a new HMRC clampdown gets under way, targeting charities and not-for-profit organisations. HM Revenue & Customs (HMRC) has initiated a programme of Structured Risk Reviews (SRRs) across the charity and not-for-profit sectors, signalling a more intensive and data-driven approach to oversight.
Enhanced Scrutiny on the Horizon
Siobhan Holmes, partner specialising in charities and not-for-profit organisations at UK top 10 accountancy firm Azets, said the new approach was designed to both recover ‘lost’ taxes and interest and further understand how the sector operates. Using its enhanced Connect analytics system, now supported by AI, HMRC draws on information from tax filings, public records, social media, and more than 30 external databases.
Holmes explained: “We expect payrolls, tax returns, VAT returns and Gift Aid claims to be examined in detail to see whether they correlate with public statements and whether tax has been underpaid. This is likely to pick up a great deal of data which was previously not considered and, as a result, even minor discrepancies, inconsistencies, or unusual patterns can prompt a review. As we know, HMRC fact-finding reviews can be onerous, time-consuming and often a cause for great anxiety for trustees and organisations finding themselves under investigation.”
Common Triggers for Structured Risk Reviews
Azets, a specialist business advisor to SMEs, charities and not-for-profit organisations, has listed common triggers for SRRs, which include:
- Large or geographically dispersed employee populations
- Multiple or complex income streams
- Repayment claims
- Trading or commercial activities
- Overseas operations, projects or subsidiaries
The areas that HMRC will be reviewing are right across the board, including:
- Corporation Tax and charitable expenditure
- Gift Aid governance and processes
- VAT treatment, partial exemption, and income recognition
- Employment taxes, benefits, and payroll controls
Charity Sector at a Glance
Latest figures from the Charity Commission show that there were 171,173 charities in the UK in 2024, nine in 10 of which were independent and with income of less than £500,000 per annum. Charities in the UK spend over £40bn a year, employ an estimated 827,000 people and contribute over £12bn a year to the UK economy.
Expert Advice for Charities
Siobhan Holmes advised: “Our advice is to seek professional advice without delay if you become the subject of an SRR or if you feel your procedures may not stand up to review. The quicker action is taken, the more chance there is of mitigating against potential penalties.”
Azets has more than 25 years’ experience providing high-quality compliance, governance, taxation and advisory services to a wide range of charities and NFPs. In the most recently published Charity Finance Magazine Audit Survey (2025), Azets ranked as one of the leading charity audit firms in the UK, receiving particular commendation for the high volume of client responses and the overall quality of service delivered.
Holmes added: “Azets achieved 100% positive feedback for charity expertise, technical competence and overall service – a result we are proud to have maintained consistently year on year.”
