Yes. I’d remove the uncertain links completely. I’ve also tightened a few parts while keeping the conversational style we’ve established. The article should stand on its own; we can add links later only where we know the destination exists.
There are few envelopes that create quite the same reaction as one with HM Revenue & Customs printed on the front.
I’ve had many telephone conversations over the years that start:
“Jonathan, I’ve received a letter from HMRC and I’m really worried.”
My first question is usually very simple.
“What does the letter actually say?”
Because receiving a letter from HMRC doesn’t automatically mean you’ve done something wrong.
Sometimes HMRC simply wants more information. Sometimes its records don’t match what has been reported on a tax return. Sometimes it has received information from another source and wants clarification.
And, occasionally, the letter highlights something that does need to be put right.
Whatever the reason, putting the letter in a drawer and hoping it disappears is rarely the best approach.
“HMRC says I haven’t declared all my income.”
This is something we see regularly.
HMRC receives information from a wide range of sources and may identify income that doesn’t appear to match the information it holds about you.
That might be rental income, investment income, overseas income or something else entirely.
Sometimes there is a perfectly reasonable explanation.
Sometimes, when we start talking through the circumstances, the client remembers income or a transaction that hasn’t been reported.
The important thing is to establish the facts before responding.
A quick reply based on what you think happened can sometimes create more questions than it answers.
The lesson?
Understand exactly what HMRC is asking before you respond.
“I haven’t declared the rent for a few years.”
This can be a particularly worrying conversation.
Someone may have started renting out a property without appreciating that they needed to tell HMRC.
Perhaps they thought there was nothing to report because the mortgage and other expenses used up most of the rent.
A few years pass.
Then an HMRC letter arrives.
At that point, the temptation can be to wait and see what happens.
That’s rarely something I’d recommend.
Where rental income or other income hasn’t been declared, there may be a route to approach HMRC and put matters right. Exactly how this should be dealt with will depend on the circumstances, how many years are involved and why the income wasn’t reported in the first place.
The important thing is to deal with it.
The lesson?
A historic tax problem doesn’t normally improve with age.
“But HMRC must have got this wrong.”
Sometimes they have.
HMRC holds an enormous amount of information, but that doesn’t mean every conclusion it reaches is necessarily correct.
I’ve dealt with cases where information simply needed clarification or where there was a perfectly reasonable explanation for the apparent discrepancy.
That’s why I don’t automatically assume either the client or HMRC is right.
We look at the records.
We establish what actually happened.
Then we decide how best to respond.
The lesson?
Don’t ignore an HMRC letter, but don’t automatically assume that HMRC’s interpretation is correct either.
The letter is usually the beginning, not the end
One thing I try to explain to clients is that receiving an HMRC letter is often simply the beginning of a process.
The first step is understanding:
why HMRC has written
what information it already holds
what information may be missing
whether anything needs correcting
when a response is required
Once we understand those points, the situation usually becomes much less daunting.
Jonathan’s Tip
If you receive an unexpected letter from HMRC, resist the temptation to telephone immediately and try to explain everything from memory.
Read the letter carefully.
Gather the relevant paperwork.
And, if you’re unsure what HMRC is asking or how you should respond, take advice before replying.
Sometimes what you don’t say initially can be just as important as what you do.
How we can help
At Tax Matters, we regularly help clients understand and respond to correspondence from HMRC.
Sometimes that involves reviewing a single letter and explaining what HMRC is asking.
In other cases, we may need to reconstruct several years of information, calculate previously undeclared income or gains and help the client make an appropriate disclosure.
And sometimes, after reviewing everything, the answer is simply that HMRC needs further information or clarification.
Whatever the circumstances, the starting point is the same:
Establish the facts before deciding what to do next.
A final thought
An HMRC envelope dropping through the letterbox can be unsettling.
But ignoring it won’t make the issue disappear.
Equally, receiving a letter doesn’t mean you should immediately assume the worst.
Open it. Read it. Understand what HMRC is asking.
And if you’re unsure what to do next, ask for help.
Very often, once we understand the problem, it’s considerably less frightening than it first appeared.
If you’ve received an unexpected letter from HMRC and would like help understanding what it means and how best to respond, my team and I would be happy to help.
