When HMRC launches a formal investigation into a person’s tax affairs, they will receive an enquiry letter.
Receiving a letter is not an automatic sign of wrongdoing, so it is best to approach the situation calmly while you ascertain the reason for the enquiry.
Why have I received an HMRC enquiry letter?
While the majority of enquiries are based on a risk assessment of a business, there are some random enquiries.
Either way, HMRC is set to be more vigilant with tax as it continues to take action against the growing tax gap.
In the 2024/25 tax year, the tax gap had an estimated value of £59.2 billion – an amount equal to 6.4 per cent of the total tax owed in the UK.
Small businesses are disproportionately responsible for tax noncompliance, as they are responsible for 62 per cent of the value of the tax gap.
As a result, HMRC may be increasing efforts to root out any ongoing issues with tax compliance in order to achieve its goal of reducing the tax gap by £10 billion by the 2029/30 tax year.
How should I respond to an HMRC enquiry letter?
Once an HMRC enquiry letter is received, you will have 30 days in which to respond.
This is sufficient time for seeking expert advice from an expert accountant to ensure that you are approaching the situation in the appropriate manner.
We can support you in understanding what HMRC needs to see from you and determining whether the requests are reasonable.
If you suspect that you may have made a mistake with your tax, it is important to disclose this at the earliest opportunity.
HMRC can adjust penalties based on a person’s openness and honesty, with those who conceal information being treated more severely.
Should it not be possible to collate the requested information prior to the deadline, you should seek an extension from HMRC before the deadline elapses.
There are times when HMRC may ask for information beyond its scope and we can help you to understand when and where disclosure is necessary.
If you want a more confident approach in handling HMRC enquiry letters, get in touch with our team today.
