It’s fair to say that a tax enquiry from HM Revenue and Customs (HMRC) is not a pleasant experience and, whether you’re an individual or operate a business, HMRC doesn’t have to suspect wrongdoing to open an enquiry.

Tax legislation permits HMRC to open enquiries, and taxpayers are obliged to comply, assuming the enquiry has been opened properly and in accordance with the law. Enquires can be costly, both in terms of time and the professional fees for advisers to deal with HMRC, not to mention stressful.

Increase in enquiries

During the height of the COVID-19 crisis, HMRC deployed a lot of their enquiry team into other areas and there was a noticeable drop in enquiry activity. Even ongoing enquiries were generally taking a lot longer to deal with – perhaps HMRC hadn’t quite mastered working from home as well as the rest of us?

It wasn’t unreasonable to assume that HMRC would eventually intensify their enquiry activity and, with 2021’s reported tax investigation revenue increasing by £1.2bn compared to 2020, it seems that the wait is over. The total revenue generated from investigation activity was in fact a staggering £30.8bn. It’s therefore not so surprising that we are now seeing an increase in HMRC enquiry activity, with more new enquiries being opened.

What to do if you get an enquiry

If you are the subject of an enquiry, the first thing that needs to be established is whether HMRC is acting within the scope of the tax legislation. Whilst this may seem surprising, some HMRC enquiries or ‘requests for information’ are not actually in line with the law and this can potentially be your first ‘push back’. Assuming they are within their rights to open the enquiry, you should make sure you get appropriate professional advice to try minimising (as far as possible) any adjustments to your tax liability at the end. Tax law is complex and constantly changing, unless this is your area of expertise it’s not something you can afford to dabble in.

Whilst it can be costly to get professional advice, the alternative can be more expensive. We offer a service which you can sign up for to cover the professional fees of an enquiry is you are unlucky enough to suffer one during the service period – find out how to get peace of mind with fee protection

HMRC’s strapline has been ‘tax doesn’t have to be taxing’. I would agree but, in most instances, only when you have the right adviser on board. With that in mind, please get in touch with your usual Sagars contact who will be able to help you with any fee protection enquiries.  Call 0113 297 6789 or email

Kate Naylor
Kate Naylor
Tax Partner

Kate works with businesses and their owners on tax strategies and mitigation, looking at business and personal tax structures to achieve long term goals.

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