When HMRC Gets It Wrong: Understanding Your Rights to Challenge a Tax Assessment
For most taxpayers, HMRC is seen as the final authority when it comes to tax. If a letter arrives with a calculation or assessment, the assumption is often that it must be correct.
But that isn’t always the case.
In practice, HMRC assessments can and do contain errors—whether due to incomplete information, incorrect assumptions, or misunderstandings of the facts. The key issue is not whether HMRC can make mistakes (they can), but whether taxpayers understand how and when those mistakes can be challenged.
This is where many problems arise.
Deadlines are missed, incorrect assessments go unchallenged, and taxpayers either pay more than they should—or find themselves in prolonged disputes that could have been resolved earlier with the right approach.
This article looks at how HMRC assessments work, when they can be challenged, and the practical considerations that often determine the outcome.
What Is an HMRC Assessment?
An assessment is HMRC’s formal calculation of the tax they believe is due.
This can arise in several situations, including:
- Where a tax return has not been filed
- Where HMRC believes a return is incorrect
- Following an enquiry
- Through discovery assessments (where HMRC believes income has not been fully declared)
In some cases, the assessment is based on full information. In others, it may be based on estimates or assumptions, particularly where HMRC believes the taxpayer has not provided sufficient detail.
That distinction is important.
Estimated Assessments: When HMRC Doesn’t Have the Full Picture
Where a return hasn’t been submitted, HMRC can issue a determination—effectively an estimated tax bill.
These are often significantly higher than the actual liability because they are designed to prompt action. However, they remain legally enforceable unless replaced by a valid return.
A common mistake is assuming:
“It’s only an estimate, so it doesn’t matter.”
It does.
If not dealt with correctly, estimated assessments can:
- Trigger penalties and interest
- Lead to debt collection action
- Create cash flow issues unnecessarily
The correct approach is not to ignore them, but to replace them with accurate information as soon as possible.
When Can an Assessment Be Challenged?
There are three main routes:
1. Amendment of a Return
If the issue relates to a submitted tax return, the first step is usually to amend it—provided you are still within the 12-month amendment window.
This is the simplest route, but also the most commonly missed.
Once that window closes, options become more limited.
2. Appeal Against an Assessment
Where HMRC issues an assessment (for example, following an enquiry), you generally have the right to appeal.
The key points are:
- Appeals must usually be made within 30 days
- You must state the grounds clearly
- HMRC may review the decision internally before it proceeds further
Missing the appeal deadline is a critical error. While late appeals can sometimes be accepted, this is not guaranteed.
3. Overpayment Relief
If the normal routes are no longer available, overpayment relief may be an option.
However, as discussed in our previous article, this is not a fallback for missed deadlines. It only applies in specific circumstances and comes with its own strict conditions.
Discovery Assessments: A Common Area of Dispute
One of the more complex areas involves discovery assessments.
These arise where HMRC believes:
- Income or gains have not been fully assessed, and
- The loss of tax is due to careless or deliberate behaviour, or
- HMRC could not reasonably have been aware of the issue based on the information provided
The time limits here vary:
- 4 years for standard cases
- 6 years where carelessness is involved
- 20 years for deliberate behaviour
The critical issue in many cases is whether HMRC was entitled to make the discovery in the first place.
This often turns on:
- What information was included in the original return
- Whether disclosures were sufficiently clear
- Whether HMRC should reasonably have identified the issue earlier
These are not always straightforward questions—and they frequently end up in tribunal.
Where Things Go Wrong in Practice
In theory, the rules are clear. In practice, problems arise because:
Deadlines Are Missed
Whether it’s the 30-day appeal window or the amendment period, timing is often the deciding factor.
Incorrect Route Is Taken
For example, attempting to use overpayment relief when an appeal would have been more appropriate.
Lack of Supporting Evidence
Even where the taxpayer is correct, the inability to demonstrate this clearly can weaken a case.
Failure to Engage Early
Ignoring correspondence or delaying responses can escalate what would otherwise be a manageable issue.
Practical Approach: How to Handle an HMRC Assessment
If you receive an assessment, the priority is not to react emotionally, but to assess it properly.
A structured approach is key:
- Understand the Basis of the Assessment
What assumptions has HMRC made? What information have they used? - Compare Against Your Records
Are the figures correct? If not, where is the difference? - Identify the Correct Route
Is this an amendment, an appeal, or something else? - Act Within the Time Limits
This cannot be overstated—most options are time-sensitive.
How Merranti Can Help
Dealing with HMRC is rarely just about the numbers—it’s about understanding process, timing, and strategy.
At Merranti Accounting, we support clients by:
Reviewing Assessments in Detail
We don’t take HMRC figures at face value—we break them down and identify where issues arise.
Advising on the Correct Approach
Whether it’s an amendment, appeal, or alternative route, we ensure the right process is followed.
Managing HMRC Communication
We handle correspondence, present arguments clearly, and ensure responses are timely and structured.
Reducing Risk Going Forward
Beyond resolving the issue, we help ensure your systems and reporting reduce the likelihood of future disputes.
Final Thought
HMRC assessments are not always final—but your ability to challenge them depends on what you do next.
Understanding your rights, acting within the correct timeframes, and taking the right approach early can make the difference between a straightforward resolution and a prolonged dispute.
If you’re unsure about an assessment—or whether it’s correct—it’s always better to review it properly before taking action.
