Understanding HMRC enquiries

What happens during an HMRC enquiry and how to respond. Covers types of enquiries, time limits, discovery assessments, penalties, taxpayer rights, and the appeals process.

UK-wide
Guide summary

If HMRC checks your tax return, respond quickly and accurately. You have rights during the enquiry and can appeal decisions. Keep records and get professional advice if needed.

  • Reply to HMRC enquiries promptly with accurate details
  • Keep copies of all documents sent to HMRC
  • Check enquiry time limits (12 months for returns filed on time)
  • Discovery assessments can go back 4-20 years depending on error type
  • Penalties range from 0% to 100% of tax due based on behaviour
  • COP9 cases require specialist advice within 60 days
  • Request closure if enquiry takes too long
  • Appeal decisions within 30 days
  • Use Alternative Dispute Resolution to settle disagreements
  • Get professional help for complex enquiries
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Related guides in Tax & Finance

HMRC can open an enquiry into your company's tax returns to check they're accurate. Most enquiries are routine compliance checks, but some can develop into more serious investigations.

Understanding the process and your rights helps you respond appropriately and minimise stress and cost.

Types of HMRC enquiries

What triggers an enquiry?

  • Random selection: Some returns selected for compliance checking
  • Risk assessment: HMRC's systems flag unusual patterns
  • Third-party data: Discrepancies with information from banks, employers, etc.
  • Industry campaigns: Targeted sectors identified for checking
  • Informants: Tips from former employees or competitors
  • Previous issues: History of errors or late filing

Most enquiries are aspect enquiries - focused on specific items rather than everything.

Time limits for enquiries

Understanding the windows

Normal enquiry window: If you file on time, HMRC has 12 months from receipt to open an enquiry. After that, the return is normally final.

Discovery assessments: Even after the enquiry window closes, HMRC can make "discovery" assessments if they find something was wrong. The time limits depend on behaviour:

  • 4 years: Innocent error
  • 6 years: Careless error
  • 12 years: Offshore matters
  • 20 years: Deliberate error

Important: Discovery requires HMRC to show insufficient information was provided - if you disclosed everything correctly, discovery may not be available.

Penalties for errors

Reducing penalties

Penalties can be reduced based on your behaviour:

  • Telling (disclosure): Did you tell HMRC about the error?
  • Helping: Did you help HMRC calculate what's owed?
  • Giving access: Did you provide documents and information?

Unprompted vs prompted: Lower penalties if you disclose before HMRC asks. If HMRC discovers the error first, penalties are higher.

Suspension: Penalties for careless errors can be suspended for up to 2 years if you agree conditions (e.g., improved record-keeping). If you comply, the penalty is cancelled.

Code of Practice 9 (COP9)

COP9 is HMRC's process for investigating suspected serious tax fraud.

If you receive a COP9 letter

Get specialist advice immediately. COP9 cases are serious - HMRC believes you have deliberately evaded tax and is offering an alternative to criminal prosecution.

The Contractual Disclosure Facility (CDF) offer means:

  • If you make a complete and accurate disclosure, HMRC won't pursue criminal investigation
  • You'll pay the tax owed plus interest and penalties (up to 200%)
  • If you decline or make incomplete disclosure, criminal investigation may follow

60-day deadline: You have 60 days to accept or decline the CDF offer. Don't delay seeking advice.

Your rights during enquiries

Working with HMRC

  • Respond promptly: Delays extend the enquiry and may suggest non-cooperation
  • Be accurate: Double-check responses before sending
  • Keep records: Document all communications
  • Ask for clarity: If you don't understand a request, ask HMRC to explain
  • Get advice: Consider professional representation for complex enquiries
  • Request closure: If HMRC is taking unreasonably long, you can apply to the tribunal for a closure notice

The appeals process

Choosing your route

Statutory review:

  • Free - no tribunal fees
  • Fresh look by different HMRC officer
  • 45 days to complete
  • Doesn't prevent tribunal if unhappy with outcome

Direct to tribunal:

  • Independent decision-maker
  • Fees may apply (can be recovered if successful)
  • Longer process but legally binding

Alternative Dispute Resolution (ADR):

  • Neutral HMRC mediator
  • Can resolve disputes without tribunal
  • Suitable for factual disputes or complex cases

Interest and payment

Managing cash flow

If you can't pay what HMRC says you owe:

  • Time to Pay: Negotiate a payment plan with HMRC
  • Continue appealing: If you dispute the amount, appeal doesn't require full payment
  • Postponement: Request postponement of disputed tax during appeal

Warning: Interest runs on underpaid tax from the original due date, even during appeals. If you lose, you'll pay interest on the whole period.

Practical steps when contacted by HMRC

  1. Don't panic: Most enquiries are routine
  2. Note the deadline: Record when you must respond
  3. Understand the scope: What exactly is HMRC asking about?
  4. Gather documents: Locate relevant records
  5. Consider advice: For anything complex, consult an accountant or tax adviser
  6. Respond on time: Meeting deadlines shows cooperation
  7. Be honest: Don't guess - if you don't know, say so
  8. Keep copies: Retain everything you send to HMRC