HMRC enquiry · What to do · UK guide
HMRC enquiry letter received: what to do next.
Written by Iftikhar Rashid FCCA — Managing Partner, RR Accountants. 16 years in practice.
Short answer: do not panic. But do not ignore it.
An HMRC enquiry is a formal examination of your tax return. It does not mean you have done anything wrong — many enquiries are random. It does mean you need to respond by the stated deadline (usually 30 days) with accurate, documented information. Do not respond alone — an unconsidered response can expand the enquiry. If you do not have an accountant, speak to one before replying to HMRC.
Your immediate next steps:
Do not ignore the letter
A response deadline will be stated. Missing it risks escalation.
Do not amend or destroy records
Leave everything as it is. Changes now look suspicious.
Contact your accountant today
Before you respond to HMRC. Not after.
Gather your records for the period
Bank statements, receipts, rent records, invoices for the year under enquiry.
Types of HMRC enquiry
Aspect enquiry
What it is
HMRC focuses on one specific part of your return — for example, rental income, a specific expense claim, or an R&D credit. Most landlord and director enquiries are aspect-led.
How to respond
The letter will specify what HMRC wants to examine. Respond only to what is asked.
Full enquiry
What it is
HMRC examines the entire return. Less common than aspect enquiries. More likely if HMRC believes there are multiple issues.
How to respond
Comprehensive record provision is required. Professional handling is essential.
Random enquiry
What it is
Selected without any specific suspicion — HMRC runs random compliance checks across all taxpayer types.
How to respond
Most common for landlords and sole traders. Cooperative response with accurate records typically resolves quickly.
Data-match enquiry
What it is
HMRC's Connect system matches your return against data from banks, land registry, letting agents, Companies House, and overseas sources. A mismatch triggers the letter.
How to respond
HMRC usually knows what they found. Provide accurate records for the period — do not guess or estimate.
Common HMRC enquiry triggers for landlords
Undisclosed rental income
HMRC's Connect matches land registry ownership records with declared income. If a property appears in land registry data but not in self-assessment, it triggers a letter.
Expense claims that look high vs income
If allowable expenses are a high percentage of rental income, HMRC may want to see evidence that they are genuine business costs.
Capital improvements claimed as repairs
The repair vs improvement distinction is a common audit point. HMRC checks that capital expenditure (improvement) was not incorrectly claimed as a deductible repair.
Section 24 not handled correctly
Errors in the mortgage interest calculation — or claiming the old full deduction rather than the 20% credit — are flagged by HMRC's systems.
CGT not reported within 60 days
Since October 2021, property disposals must be reported within 60 days. Missing this is one of the most common triggers for HMRC landlord contact.
Let Property Campaign
HMRC runs targeted campaigns for landlords with undisclosed income. Voluntary disclosure before an enquiry opens attracts lower penalties.
HMRC enquiry — FAQs
What is an HMRC enquiry?
An HMRC enquiry (formally called a compliance check or self-assessment enquiry under Section 9A TMA 1970) is HMRC's formal power to examine a submitted tax return in detail. HMRC can open an enquiry within 12 months of the filing deadline, or longer if they believe there has been fraud or deliberate misstatement. Enquiries can be random (not triggered by any specific concern) or aspect-led (focused on a specific income type or claim).
What types of HMRC enquiry are there?
The main types are: (1) Full enquiry — HMRC examines the whole return; (2) Aspect enquiry — HMRC focuses on one aspect (e.g. rental income, expenses, R&D claim); (3) Random enquiry — selected without specific suspicion; (4) HMRC Connect data-match enquiry — triggered by data HMRC holds from third parties (banks, land registry, Companies House). The letter will usually indicate what HMRC is looking at.
What should I do immediately after receiving an HMRC enquiry letter?
Four steps: (1) Do not ignore it — there will be a response deadline, typically 30 days; (2) Do not respond alone — an unconsidered response can expand the enquiry; (3) Contact your accountant immediately; (4) Gather your records for the period under enquiry. Do not destroy or amend any documents. If you do not have an accountant, speak to one before responding to HMRC.
Can HMRC open an enquiry into past tax years?
Yes. HMRC can typically open an enquiry up to 12 months after the filing deadline for the year in question. If HMRC believes there has been negligence (careless inaccuracy), they can go back 6 years. For deliberate tax fraud, they can go back 20 years. The period HMRC is examining will be stated in the enquiry letter. [VERIFY: current enquiry time limits at gov.uk]
What records does HMRC typically ask for in a landlord enquiry?
For landlords, HMRC typically requests: rent receipts and tenancy agreements; bank statements showing rental income; receipts and invoices for claimed expenses; mortgage statements (for Section 24 purposes); details of any property purchased or sold during the period; and records of any capital expenditure claimed. Well-maintained digital records through Compliance Vault™ allow us to respond to most enquiries within days.
What happens if HMRC finds an error in my return?
If HMRC identifies an underpayment of tax, they will issue an amendment showing the additional tax due, plus interest from the original payment date. If they find a deliberate inaccuracy or negligence, they may also charge a penalty — typically a percentage of the underpaid tax, depending on the nature of the error, whether it was disclosed, and how cooperative you were. Errors due to misunderstanding (rather than deliberate non-disclosure) typically attract lower penalties. [VERIFY: current penalty rates at gov.uk]
Can I appeal an HMRC enquiry decision?
Yes. If you disagree with HMRC's finding after an enquiry, you can appeal to the Tax Tribunal. The First-tier Tax Tribunal is independent of HMRC. Before formal appeal, there is usually an Alternative Dispute Resolution (ADR) process — a mediated discussion with HMRC's resolution team. Many enquiries are resolved at ADR without formal tribunal proceedings.
Received an HMRC letter? Call us today.
We handle HMRC enquiries for landlords and limited company directors. Book a call today — before you respond to HMRC. Compliance Vault™ means our clients' records are always ready for an enquiry. For new clients, we start with a full records review before any response is sent.
Book a call today →Iftikhar Rashid FCCA · 16 years · Specialist in property and landlord tax