Facing a Self Assessment Enquiry from HMRC

A self assessment enquiry letter means HMRC has opened a formal check into your tax return under section 9A TMA 1970. It does not mean HMRC has already concluded that your return is wrong. The letter should explain whether the enquiry covers the whole return or a single aspect, such as one expense category or a claimed relief.

HMRC has a limited window after you file to open this type of enquiry, usually measured from the date the return was received. If HMRC writes after that window closes, check the date carefully, because a late section 9A notice may be invalid and any query may instead need to proceed under different rules, such as a discovery assessment.

HMRC does not have to explain in detail why it selected your return, and an enquiry does not by itself suggest wrongdoing. Triggers can include data held by HMRC that does not match your return, an unusual or high claim relative to your history, third-party information from banks, platforms or agents, or simple random selection.

Some enquiries follow a specific mismatch, such as rental income reported by a letting agent that differs from the figure on your return, or dividend and interest data supplied by financial institutions. Others arise because a claim, such as high expenses relative to turnover, looks unusual for the trade. Knowing the likely trigger helps you focus your response.

HMRC can request information or documents that are reasonably required to check your tax position, using powers under Schedule 36 FA 2008. Personal bank statements can fall within scope if they are relevant, for example where undeclared income is suspected or business and personal finances are mixed.

A formal information notice under Schedule 36 carries legal force, and failing to comply without reasonable excuse can lead to penalties. Some notices carry a right of appeal to the tribunal, particularly where the request seems unreasonable or disproportionate to the enquiry's scope. If you disagree with a request, raise this promptly with HMRC or seek advice rather than ignoring the deadline.

You are not required to hand over every personal record simply because an enquiry exists. Where a request goes beyond what the stated scope reasonably requires, you can ask HMRC to explain the relevance, or challenge an appealable information notice through the tribunal.

There is no fixed duration. A single-issue aspect enquiry with clear records might close within a few months, while a full enquiry covering several years or complex income sources can run well beyond a year. HMRC controls the pace, though a prompt and organised response usually helps.

The enquiry ends when HMRC issues a closure notice under section 28A TMA 1970. This states HMRC's conclusions and, where relevant, amends your return to reflect additional tax due. If HMRC has not closed the enquiry within a reasonable time, you can apply to the tribunal for a direction requiring HMRC to issue a closure notice.

Where an enquiry uncovers an inaccuracy, HMRC considers a penalty under Schedule 24 Finance Act 2007. The penalty percentage depends on the behaviour behind the error: careless, deliberate, or deliberate and concealed, with careless errors attracting the lowest range and deliberate concealment the highest.

Whether the disclosure was prompted or unprompted also affects the range. An unprompted disclosure, made before you had reason to think HMRC was about to discover the error, generally allows a lower penalty than one prompted by HMRC's enquiry itself. Within any given range, the penalty can be reduced further for telling HMRC promptly, giving practical help, and allowing access to records.

Interest also runs on unpaid tax from the original due date, separately from any penalty. A well-organised, cooperative response during the enquiry, rather than at its conclusion, tends to support a lower penalty outcome.

A frequent mistake is treating every HMRC question as requiring an immediate, detailed answer without first checking whether it falls within the stated scope. Sending unrequested documents can widen the enquiry unnecessarily and raise new questions HMRC had not previously considered.

Other common errors include missing the reply deadline without asking for an extension, failing to reconcile figures back to the original return before responding, and describing uncertain facts as definite when records do not fully support them. Ignoring a Schedule 36 notice, rather than querying or appealing it, can also lead to an avoidable penalty for non-compliance.

Consider an anonymised example. A self-employed consultant filed a return showing a modest profit after claiming home office and travel expenses. HMRC opened an aspect enquiry into the expenses claim after noticing the ratio of expenses to turnover was higher than typical for the trade sector.

The consultant provided a schedule of expenses with supporting invoices and a reasonable basis for the home office apportionment. HMRC accepted most items but found that a portion of claimed mileage related to personal journeys, resulting in a modest adjustment. Because the disclosure was cooperative and the error was careless rather than deliberate, the penalty applied at the lower end of the available range, and the enquiry closed within several months of the opening letter.