HMRC enquiries and representation for companies and directors

The main ones are enquiries into the corporation tax return, checks on PAYE and benefits in kind, VAT visits and queries, and reviews of specific claims such as R&D relief. Some are routine and desk-based, asking a few questions. Others are wide-ranging and ask for records, explanations and sometimes a meeting. The letter will usually say which tax and period it concerns.

Do not ignore it and do not reply in a hurry. Note the date, deadline and the tax and period concerned, and keep the envelope or email. Send it to us as soon as you can. Many deadlines are short, but they can often be extended with a proper request. A calm first reply, based on the full facts, usually makes the biggest difference.

Where a company files its corporation tax return on time, HMRC can generally open an enquiry within 12 months of the day it is delivered. For late returns, amended returns and some groups, the window works differently. After the window closes, HMRC has to rely on a discovery assessment, which needs specific conditions. We check which rules apply to your return.

For corporation tax, a discovery assessment can reach back four years from the end of the accounting period, six years if the loss of tax was caused by careless behaviour, and 20 years for deliberate behaviour. The label HMRC puts on your behaviour therefore matters a great deal. We aim to show that a mistake was an honest one, with the evidence to support that.

You can do either, but contact with HMRC can easily go wrong when it is done on the back foot. Casual comments can widen the scope of an enquiry, and incomplete answers can prompt more questions. Having a Chartered Tax Adviser as your agent means the technical position, your records and the tone of each reply are checked before anything is sent.

You authorise us as your agent for the relevant tax. We then read the correspondence, set out the issues, gather the records with you, draft the replies and handle calls and meetings. You are told what is happening at each stage and approve anything that commits you. Omar Aswat, a Chartered Tax Adviser, leads the response personally.

HMRC writes to say it is enquiring into the return, then asks questions and for documents on specific entries, or on the return as a whole. When it is satisfied, or the dispute is settled, it issues a closure notice with its conclusion. We keep the enquiry narrow, answer what is asked fully but no more, and challenge requests that go beyond the legal powers.

Common areas are employment status, expenses and benefits in kind, payments to directors, board and family members on the payroll, and whether the right tax and National Insurance has been paid on bonuses and benefits. A beneficial loan to an employee or director can be a taxable benefit. We review the payroll controls and then agree how to put any errors right.

They sit between the company and the owner, and mistakes are easy to make. If a participator owes the company money at the end of the accounting period, a tax charge of 35.75% of the loan can arise for loans made on or after 6 April 2026, if it is not repaid within nine months. Interest-free or cheap loans can also create taxable benefits.

The company pays an additional tax equal to the dividend upper rate, which is 35.75% for loans made on or after 6 April 2026 and 33.75% for earlier loans. It is due nine months and one day after the end of the accounting period and is refundable once the loan is repaid, released or written off. Careless repayments and re-borrowings are examined closely.

HMRC will usually ask for the technical basis of the projects, the staff and cost records and the supporting information behind the additional information form. A claim without a valid notification or form can be treated as invalid. Payments may be held while HMRC checks. Contemporary project records are the best protection, which we help to organise and present.

HMRC can ask questions about VAT returns, visit the business, review records and challenge input tax claims, partial exemption, the treatment of property and the accuracy of returns. Mistakes can lead to assessments, interest and penalties. We look at the high-level picture with you, cover the points HMRC typically raises, and bring in VAT specialists for complex or contentious issues.

Penalties for inaccuracy depend on the behaviour behind the error: whether it was a reasonable mistake, careless or deliberate, and whether the company told HMRC unprompted or after being asked. The more the company cooperates and discloses, the lower the penalty can be. That is a strong reason to take advice early and to be open with HMRC, with a clear explanation.

Usually yes. Correcting an error before HMRC finds it generally leads to lower penalties than waiting. The best approach depends on the tax, the period and the size of the error, and sometimes on whether it was careless. We quantify the position first, then agree how to make an accurate disclosure that reduces risk.

It can. Buyers and investors often ask about open enquiries and past disputes, and an unresolved matter can lead to a price reduction, a retention or an indemnity. Where a sale is near, we look at whether to settle quickly, how to describe the issue in disclosures, and how to protect any reliefs. Early advice usually keeps options open.

Yes. A company enquiry can lead to questions about directors' personal returns, for example on dividends, loans and benefits. Equally, a personal enquiry can touch the company. We look at both together so that the answers given are consistent. Our Private Families HMRC Enquiries page covers personal enquiries in more detail.

It varies widely. A narrow query can close in a few weeks. A complex enquiry into a group or an R&D claim can run for many months and sometimes beyond a year, especially if it goes to a tribunal. The speed depends partly on how quickly HMRC gets complete, well-organised answers, which is something we can influence.