Posted: 24. September 2019 by: Rupert Tennant

What Are HMRC Enquiry Letters?

No one likes getting a letter from HMRC. However, there’s a chance sometimes you’ll get one, and that’s something you need to be prepared for since it’s an official document from the government and it will require you to respond.

Some of these letters are friendly, and they just require you to clear a few things up about your tax while others suggest that HMRC believes there’s a problem with your tax returns. In both cases, you’ll need to consult your accountant and address the letter directly.

What to do?

The first thing to know about the letter is that it’s not a reason to panic at all. Read the letter, and give it to those in your company who should be aware of it (mostly accountants and lawyers) and make sure you put it in an archive. It’s important to keep track of all of your communications with HMRC in an organized way.

This archive should also include the details about other communication you have had with HMRC: including emails, and notes about the phone calls you’ve made and the dates on which they took place. That’s how you create a paper trail.

Your rights

The letter doesn’t mean that HMRC now has some new rights when it comes to learning about your business finances. In fact, this is exactly the right time to be sure that you know what your rights are and how you can protect them. HMRC itself provides a lot of information on this matter.

Also, it might be a good idea to consult an accountant and a lawyer to be sure what kind of data HMRC can ask from you and how and when you need to provide it in order to prove your financial dealings.

Tax fraud

The most serious thing to be accused of by HMRC is tax fraud. That means that the mistake regarding your tax return isn’t actually a mistake but that you’ve tried to hide how much you owe. This is mostly done by omitting or by concealing a portion of your income in the returns sent to HMRC.

When you’re accused of tax fraud, you should take that seriously and hire a lawyer to see what your options are, especially if you know that the accusations are true. Have in mind that there will be other consequences beyond paying your debts.

A mistake

More commonly, the issue with HMRC comes from making a mistake. Things are much easier when you make a mistake even though there might be some additional fees here as well. If you know that you’ve made a mistake, you could easily correct it with HMRC.

The government is reasonable in this regard and rather open about the fees you need to cover. When it’s clearly noticeable that the mistake has happened by accident and not due to the lack of attention and care, you won’t be charged any additional fees.

Next steps

HMRC will ask you to provide the documents about your finances that will prove how much you’ve made and how much taxes you need to pay. When you don’t comply with the letter, HMRC will send you a more formal inquiry, and it’s best not to wait for this to happen since that proves that you want to cooperate.

If this isn’t enough to put things in order, you might need to take a meeting with HMRC representatives. However, this is sometimes a good thing since it cuts down the time needed to comply with HMRC requires. As an owner, you don’t need to attend personally.

Closing the enquiry

The last step in the process is for HMRC to close the enquiry. This can be done simply by providing additional information and explaining yourself. In other cases, it will be over when you pay the fees that have come about from the mistakes you’ve made.

Make sure that you ask HMRC is the enquiry closed and that you get the document that proves that it is. It’s a large organization, and mistakes are made, so you want to have proof. Keep the proof as a part of the same archive in regards to the issue.


HMRC will send you an enquiry letter in which they ask you to explain something about your finances. That happens when there’s something odd about your finances and about your tax records. Sometimes that’s just about providing a missing document, and sometimes it’s a complicated and long process.

Make sure you use the services of a lawyer and an accountant since they will help you get the most out of the process and lose as little time as you need to. This is imperative since the process of equity is time-consuming, and that’s your most important resource.

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