You Have Received an HMRC Enquiry Notice
If HMRC has opened a formal enquiry into your tax return, you have legal rights and obligations. You must respond within the deadlines set by HMRC. Disputes can be referred to Alternative Dispute Resolution (ADR) or appealed to the First-tier Tax Tribunal (FTT).
Quick Answer
HMRC can open an enquiry into a self-assessment return within 12 months of the filing date (Taxes Management Act 1970 s.9A). If you receive an enquiry notice, engage a tax adviser or accountant immediately. Respond within any deadline given. If you disagree with HMRC's conclusions, you can request ADR or appeal to the First-tier Tax Tribunal (FTT).
Full Explanation
An HMRC enquiry (formerly called an 'investigation' or 'inquiry') is a formal process by which HMRC examines a taxpayer's return to check its accuracy. Enquiries into self-assessment income tax returns are governed by Taxes Management Act 1970 (TMA 1970) s.9A; enquiries into company tax returns are governed by Finance Act 1998 Schedule 18 para 24.
HMRC has 12 months from the filing date of a return to open an enquiry without needing to show any specific reason — this is known as an 'aspect enquiry' (limited to a specific aspect of the return) or a 'full enquiry' (examining the entire return). After the 12-month window, HMRC can only reopen returns where there is a specific reason to believe a loss of tax has occurred — a 'discovery assessment' under TMA 1970 s.29.
On receiving an enquiry notice, the taxpayer is legally required to provide any documents, information, or explanations that HMRC reasonably requires. HMRC may issue formal information notices under Finance Act 2008 Schedule 36 requiring specific documents. Failure to comply with a Schedule 36 notice without a reasonable excuse can result in penalties.
It is strongly advisable to engage an accountant, tax adviser, or tax solicitor immediately upon receiving an enquiry notice. Your adviser can review the scope of the enquiry, advise on what information must and need not be provided, and negotiate with HMRC on your behalf. Many enquiries are resolved through correspondence without the need for formal hearings.
If you and HMRC cannot reach agreement, Alternative Dispute Resolution (ADR) is available — a neutral HMRC mediator facilitates discussions. If ADR fails, or if you prefer a formal route, you can appeal to the First-tier Tax Tribunal (FTT) once HMRC has issued a final determination or closure notice. FTT proceedings are relatively accessible and costs do not ordinarily follow the event in tax cases.
Legal Basis
- §Taxes Management Act 1970 s.9A — HMRC's power to open enquiry into self-assessment return
- §Taxes Management Act 1970 s.29 — discovery assessment
- §Finance Act 1998 Sch 18 — enquiries into company tax returns
- §Finance Act 2008 Sch 36 — HMRC's information and inspection powers
- §Taxes Management Act 1970 s.49 — appeal against assessment
What To Do
Read the Enquiry Notice Carefully and Note the Scope
Determine whether HMRC has opened an aspect enquiry (limited to specific entries) or a full enquiry (the entire return). Note any documents HMRC has requested and the deadline for providing them. Do not destroy or alter any records. Seek professional advice before responding.
Engage a Qualified Tax Adviser or Accountant
Instruct an accountant, chartered tax adviser (CTA), or tax solicitor as soon as you receive the enquiry notice. Your adviser can review the scope of the enquiry, advise on what you must disclose, communicate with HMRC on your behalf, and help you prepare a robust and complete response.
Respond Fully and Accurately Within the Deadline
Provide HMRC with the information and documents they have requested, within the stated deadline. Where you cannot provide something by the deadline, write to HMRC explaining the reason and requesting an extension. Incomplete or misleading responses can result in penalties and may escalate the enquiry.
Request Alternative Dispute Resolution if Deadlocked
If you and HMRC cannot reach agreement after initial correspondence, request ADR. An HMRC-trained mediator will facilitate discussions. ADR is free and can resolve disputes more quickly than litigation. HMRC data shows that the majority of ADR referrals result in agreement or progress.
Appeal to the First-tier Tax Tribunal (FTT) if Necessary
If HMRC issues a closure notice with an amendment you disagree with, or a formal assessment, you may appeal to the FTT within 30 days of HMRC's decision. The FTT is an independent judicial body. Seek specialist tax litigation advice before proceeding — FTT hearings can involve significant legal and factual complexity.
Important Deadlines
Important Warnings
Do not respond to an HMRC enquiry without professional advice — an unguarded response can significantly expand the scope of the enquiry or provide HMRC with grounds for penalties.
Deliberate or reckless inaccuracies in documents provided to HMRC during an enquiry can result in civil penalties of up to 100% of the tax due and, in serious cases, criminal prosecution.
HMRC's enquiry powers under Finance Act 2008 Sch 36 are wide — a formal information notice requiring specific documents is legally binding. Challenge the notice through proper legal channels, not by simply ignoring it.