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Introduction to enquiries

Updated on 20 April 2023

Self-employment

If you are the subject of an enquiry by HM Revenue & Customs (HMRC) you have rights and must be treated fairly. On this page we provide some basic information on enquiries and explain where you can find more information.

Illustration of people standing next to a question mark, information sign and speech bubble
(c) Shutterstock / garagestock

Basic information on enquiries

An enquiry, which may also be called an investigation, an intervention or a check is the mechanism by which HMRC may scrutinise your income tax or tax credits affairs. Basically it means that HMRC will ask you some questions and possibly look at some of the documents you have used or will use to complete your tax return or tax credits claim.

There is more information in the tax basics section on the following topics:

  • the difference between an aspect and a full enquiry;
  • why HMRC may choose to open an enquiry;
  • your rights in an enquiry;
  • stand-alone Self Assessment enquiries;
  • the information you may be asked to provide;
  • discovery assessments;
  • stand-alone tax credits enquiries.

There is also information on how to survive an enquiry by HMRC.

Penalties

There is information on the kinds of penalty that HMRC can charge you, either for missing a deadline or for making an error, in the tax basics section.

We look at particular issues that you might face if you are self-employed below.

Penalties for late payment of tax

Penalties are designed to encourage compliance with the tax system and have an actual cost for you. Late payment penalties do not apply to payments on account, but do apply to balancing payments. Details of the late payment penalties are in the tax basics section.

Tax based penalties

There is information on tax based penalties and how they are worked out in the tax basics section.

After an enquiry, my taxable profits were increased for one year and decreased for the following year. No further tax is due but I have been charged a penalty. Is this right?

This is because HMRC calculate penalties based upon the amount of tax that might have been lost because of an error. So even though overall you may not have more tax to pay, HMRC look at each tax year individually and if you did not pay enough tax in one year, they may try to impose a penalty. Follow the link above to our ‘tax basics’ section which gives more information about penalties – you might be able to ask HMRC to suspend a penalty for this type of inaccuracy.

How much can HMRC charge for the late notification of the start of my business?

The table in the tax basics section shows the scale of charges, based on percentages of tax lost. These are the same as other failure to notify or late notification penalties.

Can I be charged a penalty if my business records are found to be inadequate by HMRC?

Yes, HMRC can charge a penalty of up to £3,000 where accounting records are found to be inadequate. For more information, go to our page on business records.

Making a payment at the end of an enquiry

At the end of an enquiry there is often a payment due to HMRC which has been negotiated as part of the enquiry. It can be a fairly substantial sum in some cases, and so you may not have funds available to pay the amount due in one payment.

If you cannot afford to pay the agreed sum, you may be able to negotiate with HMRC, so that you can pay by instalments.

It is important to approach HMRC as soon as possible.

There is more information in the tax basics section.

Alternative dispute resolution

You may find alternative dispute resolution (ADR) useful if you are currently experiencing an enquiry by HMRC and have, thus far, been unable to bring this to an end.

Alternative dispute resolution is a system that can be used by small and medium businesses, as well as individual taxpayers, to try and provide a quick and fair way to end disputes arising from compliance checks or enquiries.

We provide information on the following topics in the tax basics section of this website:

  • What is alternative dispute resolution?
  • When can I ask for my case to be referred for alternative dispute resolution?
  • What cases are not suitable for alternative dispute resolution?
  • What if I still do not agree with HMRC after using alternative dispute resolution?
  • How do I refer my case for alternative dispute resolution?

Tax guides

Introduction to the tax system How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax I have overpaid through PAYE on wages or pensions? How do I claim back tax if I complete a tax return? How do I claim back tax if I am taxed under the Construction Industry Scheme (CIS)? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance (PPI) pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Specified Adult Childcare credits? What is Scottish income tax? What is devolution? Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? Tax relief on your pension contributions HMRC digital services Enquiries, penalties, appeals, complaints and debt Enquiries How to survive an enquiry by HMRC Tax penalties Tax appeals Alternative Dispute Resolution How do I complain to HMRC? What if I cannot pay my tax bill? What if I have a tax credits overpayment?
Am I employed, self-employed, both or neither? Working through a limited company What is the national minimum wage? How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? How is tax collected on taxable state benefits? How do I check my coding notice? Do I need to complete a tax return? What tax do I pay on redundancy payments?Employment benefits and expenses What are benefits-in-kind? What payments and benefits are non taxable? What if I incur expenses in relation to my job? What travel expenses can I claim? What if I use my own car for business purposes? Payroll giving Allowances and expenses paid to armed forces personnel and deductions from their income Pensions and employees What is automatic enrolment for employees? What National Insurance do I pay as an employee? How do I repay my student loan? What if I do not pay enough tax? What if I pay too much tax? What if I work abroad temporarily? What if I am in the armed forces and work overseas? First time workers Apprenticeships

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