HMRC has 12 months from the date you file to open an enquiry into your tax return. They are rare. LSR Partners have submitted thousands of returns and seen one opened on their own work.

Most people assume HMRC must prove something against them. When HMRC opens an enquiry into your tax return, the opposite applies.

They ask for evidence. You produce it. It is no longer for them to prove you wrong. It is for you to prove you are right.

In episode 25 of the Tax Compass Podcast, Simon Roue and Laura Sant explain what these enquiries involve, and what actually stands up when HMRC starts asking questions.

What a Section 9A enquiry is

HMRC has 12 months from the date you file to open a formal enquiry into your return. The legislation calls it a Section 9A enquiry.

They open one when something on the return looks odd to them, without them being able to prove the position either way. That distinguishes it from a nudge letter, which usually amounts to a simple prompt about income you may have forgotten to mention.

Not every query reaches this stage. If HMRC hold a P11D you did not include, they will often simply amend the calculation and move on. Bulk letters inviting you to amend your return before an enquiry opens are also common. Both sit well short of a formal enquiry.

They are rarer than you might think

Take some comfort from the numbers. LSR Partners have submitted thousands of tax returns. Across all of them, HMRC has opened one Section 9A enquiry.

You could file returns your whole working life and never hear anything beyond routine acknowledgements. That is the normal experience.

The reason we still press clients on record keeping is straightforward. The odds are low. The cost of being unprepared for the rare occasion is not.

Respond promptly, and thoroughly

When HMRC asks for clarification, timing matters as much as substance.

If they believe you are dragging your feet, penalties can arrive before they have even considered whether your position was correct. One client came to us 12 months into an enquiry, already carrying a penalty for late provision of information. The underlying position turned out to be fine, with no material adjustment to their tax.

Deal with the request quickly, and answer it properly.

What HMRC asks for in a residency enquiry

Residency enquiries are the toughest of the lot, because they turn on facts rather than interpretation. Were you actually here? Did you really work full time overseas?

One case shows how far this can go. The client produced a contract showing at least 40 hours a week outside the UK. HMRC dismissed it. Contracted hours are not the test. Hours actually worked are, recorded as the work happened rather than reconstructed afterwards.

The evidence eventually included location records from the client's phone. One afternoon placed them at the London office, and colleagues provided affidavits explaining it: they had arrived at four and gone up to the bar for a drink. The client was relaxed about the question, because they knew exactly why they had been there.

That is what good records buy you. The ability to answer difficult questions calmly.

Remote work makes this harder

Notice what made that case workable. The client's phone data showed them at recognisable company offices in various locations. The pattern supported itself.

Work from home in another country and that clarity disappears. No office to point at, no colleagues who saw you at a desk. Your own records carry far more weight, because little else corroborates your position.

The same applies if your employer still treats you as UK based while you work overseas. You then face the task of contradicting your own employer's reporting, which is difficult however accurate you are.

Technical enquiries work differently

Not every enquiry concerns where you were. Many turn on how a rule applies.

Pensions are a common example. Someone holds a pension from one country while living in another. Is a tax credit available in the UK, or does the claim belong in the other country? One of our enquiries came down to the meaning of a single word in a double tax treaty.

Here, an unusual thing happens. If HMRC disagree with your reading and simply issue an amendment to your calculation, that is close to the best available outcome. It signals that you took reasonable care, which rules out carelessness penalties, even though late payment interest may still apply.

Keep the records now

The practical advice is the same in every case. Record hours as you work them. Keep employer timesheets where you can obtain them. Hold on to travel documents for every trip into and out of the UK. Several apps now exist for exactly this purpose.

Reconstructing three years of movements after a letter arrives is painful. Keeping the record as you go takes minutes a month.

And enquiries are not always an ordeal. One recent case took a couple of phone calls with HMRC, who agreed our position and closed the matter.

If a letter has arrived, or you want your records in order before one ever does, book a consultation at lsrpartners.com.

LSR Partners help you pay the right tax in the right place at the right time.

Part one of this miniseries covers HMRC nudge letters. Find the Tax Compass Podcast on YouTube, Spotify, Apple, or wherever you get your podcasts.

This article is for general information purposes only and does not constitute tax advice. Please contact us to discuss your specific position.