What to Do If HMRC Opens an Enquiry Into Your Tax Return
Introduction: When the Brown Envelope Arrives
Few things unsettle a taxpayer more than the arrival of a brown envelope from HM Revenue & Customs (HMRC) — especially when it’s a notice of enquiry into your self-assessment tax return.
Even if you’ve submitted your return accurately and on time, HMRC can still open an enquiry, and it’s important to respond calmly, correctly, and with a plan.
In this blog, we explain:
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Why HMRC might be enquiring into your tax return
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What to do when you receive the notice
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Your rights as a taxpayer
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How to resolve an enquiry efficiently and protect your position
Why Has HMRC Opened an Enquiry?
HMRC enquiries fall into two main categories:
1. Risk-Based Enquiries
These are triggered when something in your return flags a concern:
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Unusual income or deductions
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Drastic changes from previous years
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Industry benchmarking anomalies
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Omitted information from third-party sources (e.g. banks, employers)
2. Random Enquiries
Sometimes, returns are selected entirely at random. This can happen to anyone — even if your return is perfectly accurate.
Step 1: Check if the Enquiry Is Valid
Before doing anything else, verify that HMRC has opened the enquiry lawfully.
What to check:
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Did HMRC issue the enquiry notice on time?
For most individuals, this is within 12 months of the date the tax return was submitted. -
Is the enquiry notice dated within the correct time frame and properly addressed?
Tip: HMRC’s letter being dated within the time limit is not enough — the notice must be delivered to you in time.
If the notice is late or invalid, you may be able to challenge the enquiry and ask HMRC to close it down.
Step 2: Understand Your Rights – HMRC Must Follow Its Own Charter
HMRC is bound by the HMRC Charter, which outlines how taxpayers should be treated during an enquiry. You can read it here:
The HMRC Charter
Key principles include:
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Treating you fairly
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Making things easy for you
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Acting professionally and with integrity
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Giving you clear and accurate information
If you believe HMRC has overstepped or acted unfairly, you can:
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Raise a complaint: Complain About HMRC
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Escalate to the Adjudicator’s Office, if needed
Step 3: Decide Whether to Meet HMRC — On Your Terms
HMRC may request a meeting as part of the enquiry.
However, you are not legally obliged to attend a meeting for a standard tax return enquiry.
If you do agree:
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Request a detailed written agenda in advance
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Hold the meeting at your accountant’s office (or a neutral place where you’re comfortable)
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Prepare properly with your adviser to avoid surprises
A well-managed meeting can speed up resolution. But an unprepared one can create new issues.
Step 4: Resolving Disputes — Consider Alternative Dispute Resolution (ADR)
If you and HMRC disagree on tax treatment or figures, consider using Alternative Dispute Resolution (ADR).
ADR involves:
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A neutral HMRC mediator not previously involved in your case
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A focus on reaching agreement quickly and fairly
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Flexibility — you can withdraw at any point
ADR is particularly useful when:
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There’s a breakdown in communication
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Both parties are stuck in technical disagreement
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You want to avoid a tribunal hearing
Step 5: Ask for a Closure Notice If the Enquiry Drags On
Some enquiries can last months — even years — especially in complex self-employment or rental income cases.
If HMRC hasn’t produced anything significant after a reasonable period, you (or your adviser) can apply to the First-tier Tribunal for a closure notice.
What’s a closure notice?
It legally forces HMRC to close the enquiry, unless they can justify why they need more time.
This can be a powerful tool to push for resolution when HMRC is dragging its feet.
Practical Tips to Handle an HMRC Enquiry
1. Seek Professional Support Early
Even if you’ve never used an accountant before, this is the time to get expert help — especially if you have fee protection insurance that covers enquiry costs.
2. Stay Calm and Responsive
Don’t ignore the letter. Respond promptly and factually. If you’re unsure, refer everything to your adviser.
3. Gather Your Records
Have all relevant documents ready:
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Bank statements
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Invoices and receipts
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Rental contracts or self-employment records
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Notes of income or expenses
4. Be Consistent
Any explanation you give should be supported by documentation. Avoid guesswork or approximations.
What Happens at the End of the Enquiry?
HMRC will issue a:
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Closure Notice: confirming their findings and any changes to your tax return
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Amendment: if tax is due, plus interest and potentially penalties
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You can appeal if you disagree
Penalties may be reduced or removed if you’ve:
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Acted in good faith
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Cooperated fully
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Made an unprompted disclosure (if relevant)
Real-World Example
Case: A landlord receives an HMRC enquiry letter
Alex, a landlord with three properties, submitted his self-assessment return as usual. HMRC flags his repairs and maintenance costs as high compared to his rental income.
They request invoices, bank statements, and explanations. After initial correspondence, Alex’s accountant prepares a response with detailed records and explanations.
Result: HMRC accepts the explanation and closes the enquiry without any tax amendments.
A calm, well-supported response saved time, stress, and money.
Final Thought: A Tax Enquiry Isn’t Always Bad — But It Demands a Smart Response
Receiving an enquiry doesn’t mean you’ve done something wrong — but how you respond can make all the difference.
Being organised, understanding your rights, and working with the right professionals can mean the difference between swift resolution and a prolonged tax battle.
Worried About a Tax Enquiry? Merranti Can Help
At Merranti Accounting, we have extensive experience:
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Dealing with HMRC tax enquiries and investigations
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Liaising with HMRC on your behalf
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Preparing accurate responses
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Supporting clients through ADR or tribunal applications
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Protecting clients with fee protection insurance
Whether you’ve just received an enquiry letter or want to be ready in advance, speak to us today.
