HMRC enquiries: why “nothing to worry about” can still be costly
Receiving a letter from HMRC doesn’t mean you’ve done anything wrong. In fact, many enquiries end with no additional tax to pay at all .
However, that doesn’t mean they’re painless — or cost‑free. Nothing is ever free, especially where HMRC are involved.
Even a routine HMRC enquiry can take months to resolve. The shortest we have ever seen was about 3 months. But they do absorb management time, and require professional support that quickly runs into four figures if things are not straight forward or additional supporting information is required.
That’s why it’s worth understanding why enquiries happen, what they involve , and where the real risk sits — even for well‑run businesses.
Enquiries are often about checks, not accusations
HMRC refers to most enquiries as “compliance checks” . Their own guidance makes clear that these checks are designed to confirm that the right amount of tax has been paid , not to suggest wrongdoing. [ gov.uk ]
Checks can be opened for many reasons, including:
- figures that don’t match HMRC’s data,
- sudden changes in profits or VAT positions,
- repayment claims,
- or simple random selection.
No explanation has to be given at the outset.
What surprises many business owners is that enquiries can still be lengthy and demanding even when no errors exist . Information requests, deadline pressure, correspondence and follow‑up questions are all part of the process — and they rarely fit neatly around running a business.
“Nothing found” does not mean “nothing spent”
READ THAT AGAIN
A widely‑read professional article in Tax Adviser points out something clients often only discover once they are already in an enquiry: even where HMRC finds nothing wrong, the process is disruptive, stressful, and expensive . [taxadviser... gazine.com ]
The article highlights that:
- enquiries commonly stretch over many months,
- unnecessary information can increase scrutiny and costs,
- and advisers play a crucial role in keeping the enquiry within proper legal limits.
The key takeaway for business owners is simple: being compliant does not remove the professional time required to demonstrate that compliance. Basically you are PROVING you did everything properly.
HMRC will not reimburse accounting or adviser fees when an enquiry closes with no adjustment.
(Clients have genuinely asked this, and I understand why they would ask.)
HMRC is using more data, more consistently
Another factor driving enquiry activity is the continued use of HMRC’s Connect system — a long‑established data‑analysis tool that cross‑references tax returns with information from banks, property records, Companies House and other third‑party sources.
According to a 2025 professional feature article, Connect helped identify £4.6 billion of underpaid tax in a single year , and its effectiveness continues to increase as data quality improves. [financiala... tant.co.uk ]
For most business owners, this doesn’t mean heightened suspicion — it means greater visibility . Differences that once passed unnoticed can now trigger follow‑up questions, even where the explanation is entirely legitimate.
As the head of HMRC once said during a pod cast: "The filing of a tax return is a moment of comparison, not of discovery." This means they already know or think they know what you should be filing....
Small businesses are still a core focus
The Federation of Small Businesses (FSB) published an updated guide confirming that small businesses remain a key part of HMRC’s enquiry activity , including cases selected at random or due to minor inconsistencies. [ fsb.org.uk ]
Their guidance reinforces three practical realities:
- HMRC does not need to justify opening an enquiry.
- Good records help — but do not prevent enquiries.
- Professional representation reduces disruption and risk.
The message is not alarmist — simply realistic. It's the equivalent of an IT geek, or a garage mechanic telling you that the XXX in your car/computer is a known fault and it was just a matter of time.
Well this is a professional telling you and your business that you are as likely as any other tax payer to have an enquiry.
A calm conclusion
Most HMRC enquiries are not about wrongdoing. Many do not result in extra tax. But almost all of them involve time, pressure, and professional cost .
Understanding that distinction — between tax risk and cost risk — is what helps business owners make informed decisions about protection and preparedness.
If you ever receive correspondence from HMRC or are unsure how to respond, early advice almost always reduces stress, limits scope, and shortens the process.
Further reading (authoritative sources)
- HMRC: Compliance checks – help and support ( GOV.UK ) https://www.gov.uk/guidance/hmrc-compliance-checks-help-and-support [ gov.uk ]
- Coping with HMRC enquiries: some practical guidance – Tax Adviser (Nov 2024) https://www.taxadvisermagazine.com/article/coping-hmrc-enquiries-some-practical-guidance [taxadviser... gazine.com ]
- HMRC Connect: the £4.6bn tax detective (and growing) – Financial Accountant (Nov 2025) https://financialaccountant.co.uk/features/hmrc-connect-tax-investigations-explained/ [financiala... tant.co.uk ]
- HMRC enquiries: complete guide for small businesses – FSB https://www.fsb.org.uk/resources/article/hmrc-enquiries-complete-guide-for-small-businesses-MCRYQJOXYNJJBA3HASF6JEKPRYZE [ fsb.org.uk ]
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