The first reaction to an HMRC letter is usually worry. That is normal. But not every letter means trouble. Some are routine reminders. Others ask for information. A few open a formal enquiry.
Once you know which type it is, you can decide what to do next and how quickly to do it.
Disclaimer: This article is general information only. It is not tax or legal advice. If you are unsure about any HMRC letter, get professional advice before you reply.
Is every HMRC letter the start of an investigation?
No. Most HMRC letters are routine. They may remind you to file, confirm a payment, update your tax code, or explain a change to the tax system. A formal enquiry is different. HMRC has to open it within certain time limits, and the letter will say that clearly.
Routine letters you do not need to panic about include:
- SA300/SA316: reminder that your Self Assessment return is due
- P800: year-end tax calculation showing whether you have overpaid or underpaid
- PAYE coding notices: changes to your tax code
- Payment reminders for a bill you already know about
- Letters about changes to tax rules
Letters that need attention:
- Notice of enquiry under Section 9A or Schedule 1A TMA 1970: a formal check into your return
- COP9: a serious fraud investigation under a special procedure
- A request for information or documents
- A tax calculation showing you owe more than you expected
What types of HMRC letters should you be concerned about?
Any letter that opens a formal enquiry or asks for records and documents needs a response. Ignoring it does not make it go away. It usually makes things worse and can lead to bigger penalties. Read the letter carefully so you know what HMRC wants and when it wants it.
Notice of enquiry. This opens a compliance check into your tax return. HMRC can run an aspect enquiry, which looks at one part of your return, or a full enquiry, which covers everything. The letter will say which one it is.
Request for information. HMRC may ask for bank statements, invoices, or expense receipts to back up figures you have reported. That does not always mean HMRC suspects fraud. It can be a routine check.
Determination or assessment. If HMRC thinks you owe tax and you have not filed, it can raise an assessment for the amount it believes is due. That creates a formal debt unless you challenge it.
Penalty notice. Letters about late filing or late payment penalties are usually automatic. They can still apply even when HMRC has no wider concerns about your affairs.
What should you do first when you receive an HMRC letter?
Read the whole letter before you do anything else. Work out what type of letter it is, what HMRC is asking for, whether there is a deadline, and whether there is a reference number you need to quote. Then decide whether you can deal with it yourself or need help.
Steps to take right away:
- Read the letter all the way through. Do not stop at the first scary line.
- Note the reference number and the date of the letter.
- Check the deadline, if a response is needed.
- See whether HMRC is asking you to do something or just telling you something.
- Do not call HMRC until you understand what the letter is about.
If it is a routine reminder or an information letter, you may not need to do anything beyond keeping it on file.
If it opens a formal enquiry or asks for documents, do not reply without professional advice unless you are completely sure what you are sending.
When should you get an accountant involved?
Get an accountant involved straight away if the letter opens a formal enquiry, asks for records going back more than a year, mentions COP9, or comes with a demand for a large amount of tax you were not expecting. Bringing someone in early gives you more options and usually costs less later.
One common mistake is waiting because you think time will help. HMRC deadlines are real, and missing them can make the position worse.
Another mistake is replying before you understand the full picture. What you say early on can shape the rest of the enquiry. A specialist accountant can help you answer accurately and avoid making things harder.
Getting help from HMRC tax investigation early does not mean you are guilty. It just means you are taking the matter seriously.
What if the letter says you owe tax you do not think you owe?
Do not pay it immediately if you think it is wrong. You have the right to query an HMRC assessment or calculation. Contact HMRC and explain why you disagree. If HMRC has raised a formal assessment, you can appeal within 30 days.
Check that the letter really relates to your tax affairs. Letter fraud that pretends to be HMRC is a known scam. HMRC will never ask you to pay by bank transfer to an unfamiliar account, and it will not threaten immediate arrest in a letter.
You can check whether correspondence is genuine by using HMRC’s official contact channels.
What if the letter is about undeclared income or tax avoidance?
If HMRC is contacting you about income you have not declared, get advice before you reply. Voluntary disclosure, where you come forward and correct your position, usually leads to lower penalties than waiting for HMRC to find the problem itself.
Do not destroy records. Once an enquiry starts, you have legal duties around record keeping.
DASA can handle HMRC correspondence on your behalf
If you have received a letter and you are not sure what it means, bring it to us. We deal with HMRC correspondence and enquiries regularly. We can tell you what type of letter it is, whether you need to reply, and what to say.
Get a quote and we will send you our current pricing, DASA’s HMRC investigation service.