Notice of Enquiry – is this a tax investigation?

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Yes – this is how HMRC starts investigating your tax affairs.  It does not mean a snatch squad will arrive in the middle of the night.

An ‘Enquiry’ into your tax return might be solely to check one figure.  For example the tax-man might ask you to send proof of the pension payments you made in the year.

On the other hand the Enquiry might be into the whole of your tax affairs, including any business you are in. If a figure appears on your Self-Assessment Return then HMRC has the right to question it.

The problem is it can be difficult to know if the enquiry is a small one or a very wide one.

If you are in business then the enquiry could be quite serious as you cannot know why they are looking at your affairs.  The tax-man might have information about your tax affairs – for example that you have not told him about all your sources of income.  Or perhaps your business results do not match with those of similar businesses.

If the Notice of Enquiry letter asks a specific and simple question – such as please send proof of your pension payments – then you can probably answer the letter yourself.

If the letter is more wide-ranging you would be well advised to speak to a tax consultant. If you already have an accountant they will probably handle the matter for you. This is because your answers need to be carefully prepared to prevent getting yourself into even more bother.

Huston’s Hint

HMRC calls it an Enquiry because that word is less scary than Tax Investigation.  You should still be careful that you answer the question(s) fully and truthfully.