HMRC enquiries explained: a guide for business owners
- David Parker
- Jul 2
- 4 min read
Most business owners assume that if they keep good records, file their tax returns on time and pay the right amount of tax, they'll never hear from HMRC.
In many cases, that's true.
However, HMRC carries out thousands of compliance checks and tax enquiries every year and being selected doesn't automatically mean you've done anything wrong.
HMRC has also made it clear that improving compliance remains a priority and continues to invest in digital systems and artificial intelligence (AI) to help identify tax risks and returns that may require further review.
While no one can predict how many enquiries will be opened, it's a timely reminder that every business owner should understand what an HMRC enquiry involves and how it would be managed.
What is an HMRC enquiry?
An HMRC enquiry (sometimes called a compliance check) is when HMRC asks to review information relating to your tax affairs.
This could include your:
Self Assessment tax return
Corporation Tax returns
VAT returns
PAYE records
Business accounts and supporting documents
Sometimes HMRC only needs clarification on a particular transaction or figure. Other enquiries can be more detailed and require additional information over several weeks or even months.
Does an HMRC enquiry mean you've done something wrong?
No.
This is one of the biggest misconceptions.
Businesses can be selected for many different reasons, including routine compliance activity, sector-specific campaigns, information received from third parties or because HMRC wants to understand a particular transaction or tax position.
An enquiry is not an accusation of wrongdoing.
In many cases, everything is found to be correct and no additional tax is due.
What should you do if HMRC contacts you?
If you receive a letter from HMRC, don't panic.
The first step is to contact your accountant.
At Purple Accounts, we'll help you understand what HMRC is asking for, gather the necessary information and deal directly with HMRC on your behalf wherever possible.
Depending on the nature of the enquiry, this may involve:
Reviewing your accounting records
Gathering supporting documentation
Preparing responses to HMRC
Corresponding directly with HMRC
Advising you throughout the enquiry
Resolving any questions or issues raised
Having experienced professional support can make the process far less stressful and helps ensure your position is presented clearly and accurately.
The cost many business owners don't consider
Even where an enquiry is resolved with no changes to your tax position, there can still be professional fees involved.
Responding to HMRC often requires many hours of work behind the scenes. Reviewing records, preparing detailed responses and corresponding with HMRC all take professional time.
It's an unexpected cost that many business owners simply don't think about until an enquiry arrives.
Protecting yourself against those costs
There is, however, a way to protect yourself against the professional costs of dealing with a qualifying HMRC enquiry.
That's why we've decided to make HMRC Fee Protection available to our clients.
HMRC Fee Protection is designed to cover the professional fees incurred in handling qualifying HMRC enquiries. If HMRC opens a qualifying enquiry into your tax affairs, you can ask us to deal with the process on your behalf without worrying about unexpected accountancy fees.*
For many business owners, it's simply about having the reassurance that expert support is there if it's ever needed.
Is HMRC Fee Protection right for every business?
Every business owner has a different attitude to risk.
Some are happy to accept the possibility of unexpected professional fees should an enquiry arise. Others prefer the reassurance of knowing those costs are covered.
There's no right or wrong answer.
Our role isn't to tell you what to do.
It's to make sure you understand your options and help you make an informed decision.
If you'd like to know more about HMRC Fee Protection, including what's covered and the monthly cost, we're always happy to talk it through.
Frequently Asked Questions
Does an HMRC enquiry mean I've done something wrong?
No. Many enquiries are routine or simply involve HMRC asking for further information. An enquiry does not automatically mean you've made a mistake or owe additional tax.
Will Purple Accounts deal with HMRC on my behalf?
Yes. If HMRC contacts you, we'll guide you through the process, prepare responses where appropriate and liaise with HMRC on your behalf.
What does HMRC Fee Protection cover?
HMRC Fee Protection is designed to cover the professional fees incurred in handling qualifying HMRC enquiries and compliance checks.
Does it cover any tax owed to HMRC?
No. The policy covers qualifying professional fees associated with dealing with an HMRC enquiry. It does not cover any tax, interest or penalties that may become payable.
How much does it cost?
HMRC Fee Protection can be added to your existing monthly accountancy package for a small additional monthly fee. Please contact us for pricing.
Can I add it to my existing monthly package?
Yes. Existing clients can simply add HMRC Fee Protection to their monthly package. We'll explain the cover and answer any questions before you decide.
Interested in finding out more?
If you'd like to understand how HMRC Fee Protection works, what's covered or how to add it to your monthly package, we'd be happy to help.
Call us on 01925 979500 or email enquiries@purpleaccounts.com
Important:Â HMRC Fee Protection is subject to the policy's terms, conditions, exclusions and eligibility criteria. We'll provide full details before you decide whether to take out the cover.