Receiving a letter or notice of enquiry from HMRC may feel overwhelming for some. Many individuals and businesses react instinctively, often making decisions that can worsen their position. Understanding the first steps to take when receiving a letter or notice of enquiry from HMRC is crucial, and seeking specialist advice early can significantly improve outcomes.

Stay calm and review the letter carefully

The first step is to read the HMRC correspondence thoroughly. Take note of:

• The type of enquiry (full tax investigation, compliance check, or information request).

• The tax years affected.

• Deadlines for responses.

• Any documentation HMRC has requested.

Avoid rushing to respond. Reacting hastily or providing incomplete or too much information can create unnecessary complications or increase the scope of the investigation.

Gather your records and documentation

Once you understand the scope of the enquiry, start organising relevant records. This may include:

• Tax returns, accounts, and financial statements.

• Bank statements, invoices, and receipts.

• Correspondence with HMRC, including previous agreements or clarifications.

• Any relevant correspondence with, or advice from, an accountant or tax adviser.

Having well-organised records not only makes responding easier but also demonstrates cooperation and transparency, which HMRC views positively when considering issuing penalties in relation to unpaid tax.

Do not provide explanations or make admissions prematurely

It may be tempting to explain or justify past actions in a letter or email to HMRC, without fully grasping HMRC’s concerns or reasons for opening an enquiry. However, early admissions which may not be relevant, or incomplete explanations can sometimes prolong an investigation or increase penalties. This is why specialist representation is essential: tax investigations specialists know how to communicate with HMRC in a way that protects your interests, reduces risk, and limits the scope of the investigation.

Contact a tax investigations specialist

Engaging a tax investigations specialist early can be the difference between a manageable enquiry and a prolonged, stressful investigation. Tax investigations specialists can:

• Assess the scope of the enquiry and likely areas of focus.

• Advise on the appropriate level of disclosure and documentation.

• Communicate with HMRC directly on your behalf, reducing pressure and risk.

• Help negotiate penalties where appropriate, ensuring fair treatment.

Buzzacott’s Tax Disputes and Investigations team has extensive experience supporting clients through all types of HMRC enquiries, from small compliance checks to multi-year investigations. Our team ensures that responses are accurate, strategic, and submitted on time, protecting clients’ financial and operational interests.

Plan your next steps strategically

After the initial review, you should consider developing a step-by-step plan for responding to HMRC, and a specialist can help here also. This plan should address:

• Required documentation and deadlines.

• Allocation of responsibilities within your business or personal affairs.

• Communication with HMRC, including formal letters or meetings.

• Ongoing monitoring and risk management to prevent future enquiries.

Following a structured approach can significantly reduce stress and risks, expedite conclusion and provide clarity.

Receiving an HMRC enquiry can feel overwhelming, but taking calm, measured steps and seeking specialist representation ensures you handle the situation effectively. Early action, careful documentation, and professional representation can minimise risk, reduce potential penalties, and give you peace of mind.