Types of HMRC communication
Not every letter from HMRC means you have done something wrong. Common reasons HMRC may contact you include:
- Simple queries — asking you to confirm income, update contact details, or explain a discrepancy
- Aspect enquiry — HMRC is looking at one specific part of your tax return, such as self-employment income or a deduction you have claimed
- Full enquiry — a more thorough review of your entire return, which can take longer to resolve
- Code of Practice 9 (COP9) — a serious matter involving suspected deliberate tax fraud, typically handled differently to routine enquiries
- Compliance check — a routine check that your tax affairs are in order, applying to both individuals and businesses
Your rights
As a taxpayer, you have the right to be treated fairly, to ask HMRC to explain their reasons, and to appeal any decision you disagree with. HMRC must follow their own Code of Practice and cannot simply demand payment without evidence.
You are also entitled to professional representation. A qualified tax consultant or accountant can handle all correspondence on your behalf, removing the risk of inadvertently saying something that could be misinterpreted.
How to respond
The most important thing is not to ignore the letter. HMRC sets deadlines and failing to respond can escalate the matter and result in penalties. Responding without professional support can also be risky, as even innocent explanations can sometimes raise further questions.
The safest approach is to:
- Read the letter carefully and note the deadline
- Gather the documents HMRC has asked about
- Seek professional advice before responding
- Respond fully and accurately within the deadline
Penalties and interest
HMRC can charge penalties for inaccurate returns, late filing, and late payment. The level of penalty depends on whether the error was innocent, careless, or deliberate, and whether HMRC discovered it or you disclosed it voluntarily. Early disclosure and cooperation typically results in significantly lower penalties.
Typical outcomes
The majority of HMRC enquiries are resolved without additional tax being owed, particularly where records are accurate and complete. Where errors are found, agreeing a settlement quickly and cooperatively is almost always the best outcome for all parties.
Frequently asked questions
How long does an HMRC enquiry typically take?
A simple aspect enquiry can often be resolved within weeks. A full enquiry typically takes between 6 and 24 months, depending on the complexity of the case and how promptly both sides respond. Professional representation usually speeds up the process considerably.
Can HMRC go back more than 4 years?
In most cases, HMRC can only open an enquiry for the previous 4 tax years. However, if HMRC suspects careless behaviour, they can go back 6 years, and if deliberate fraud is suspected, they can go back up to 20 years. This makes it essential to keep accurate records.
What if I can't afford to pay what HMRC claims I owe?
HMRC does offer payment plans (known as Time to Pay arrangements) if you cannot pay a tax bill in full. A consultant can negotiate these on your behalf and challenge the calculation if it is disputed.