How Accountants Help with HMRC Enquiries and Audits

Introduction

At Towerstone our team delivers accountancy services in Bedford for day to day support plus long term planning. This piece on How Accountants Help with HMRC Enquiries and Audits is worth reading if you want to learn what to expect in an enquiry and how good records reduce stress and shorten timelines.

I have to say this is one of the moments when people most underestimate the value of having a good accountant. An HMRC enquiry or audit can feel intimidating even if you believe you have done nothing wrong. From experience the stress rarely comes from tax itself but from uncertainty, unfamiliar language and fear of getting something wrong under pressure.

I have supported many individuals and businesses through HMRC enquiries over the years. Some were simple checks resolved quickly. Others were long detailed reviews that lasted months. In every case the outcome was significantly better when the taxpayer had professional representation from the outset.

In this article I want to explain clearly how accountants help with HMRC enquiries and audits and what actually happens behind the scenes. I will cover what HMRC enquiries are who they affect how the process works what HMRC is really looking for and how an accountant protects you legally financially and emotionally throughout the process.

This is written from real UK accountancy experience and grounded in HMRC practice rather than theory.

What an HMRC Enquiry or Audit Actually Is

An HMRC enquiry is a formal review of a tax return or financial position. It does not automatically mean HMRC thinks you have done something wrong. In many cases enquiries are triggered by inconsistencies patterns or random checks.

HMRC uses the word enquiry rather than audit but in practical terms people often use the words interchangeably.

HMRC enquiries can relate to:

Self Assessment tax returns
Corporation tax returns
VAT returns
PAYE and payroll
CIS returns
Capital gains tax
Inheritance tax

The scope can be narrow or wide. Some enquiries focus on a single figure. Others open up an entire business for review.

From experience the biggest mistake people make is assuming they can handle it themselves without understanding the implications.

Who HMRC Enquiries Affect

HMRC enquiries can affect almost anyone who files tax information in the UK.

That includes:

Self employed individuals
Limited company directors
Landlords
Property investors
High earners
Small and medium sized businesses
Employers running payroll
VAT registered businesses

In Bedford I regularly see enquiries affecting owner managed companies and landlords simply because of the volume of data HMRC now holds and cross checks.

HMRC does not just look at tax returns in isolation anymore. They compare information across banks employers tenants letting agents pension providers and other government departments.

Why HMRC Opens Enquiries

From experience HMRC enquiries usually arise for one of four reasons.

Inconsistencies in reported figures
Unusual patterns compared to similar taxpayers
Late filings or repeated amendments
Random compliance checks

For example HMRC may question:

Large expense claims
Fluctuating income
Director loan account movements
Losses year after year
High refunds
VAT reclaim patterns

An enquiry is not an accusation. It is HMRC asking you to prove the numbers you have submitted.

The Emotional Impact of an HMRC Enquiry

I think this is important to say because it is often dismissed.

Receiving an HMRC enquiry letter is stressful. Even confident business owners feel anxious. I have seen people lose sleep over it.

The language is formal. The deadlines are strict. The power imbalance feels real.

One of the biggest roles an accountant plays is absorbing that pressure so you do not have to carry it alone.

The First Thing an Accountant Does When an Enquiry Starts

The first step is always to slow things down and establish control.

From experience the worst thing you can do is panic and respond too quickly without understanding what HMRC is asking.

An accountant will:

Review the HMRC letter
Clarify the scope of the enquiry
Check deadlines
Identify what information HMRC is legally entitled to
Confirm what they are not entitled to

This step alone often prevents unnecessary disclosure that could widen the enquiry.

Acting as Your Agent with HMRC

One of the most valuable things an accountant does is act as your authorised agent.

Once appointed HMRC communicates directly with the accountant rather than you.

This means:

No unexpected phone calls
No confusing letters landing on your desk
No pressure to answer questions on the spot

From experience clients feel immediate relief once this happens.

It also ensures that everything said to HMRC is accurate consistent and strategically considered.

Understanding What HMRC Is Really Asking

HMRC questions often look simple but are rarely accidental.

An accountant understands how HMRC frames questions and what information they are actually trying to obtain.

For example a request for bank statements may be about:

Undeclared income
Private use of company funds
Loan account movements
Cash deposits

A request for invoices may be about:

Inflated expenses
Incorrect VAT treatment
Timing differences

From experience knowing the why behind the question is as important as the answer itself.

Preparing and Reviewing Documentation

HMRC enquiries are evidence based.

Accountants help by:

Gathering relevant records
Reconstructing missing data
Checking consistency with filed returns
Ensuring explanations align with figures

This includes reviewing:

Bank statements
Invoices and receipts
Mileage logs
Expense claims
Payroll records
VAT workings
Capital allowances calculations

From experience well prepared records shorten enquiries significantly.

Correcting Errors Without Escalation

One of the most misunderstood aspects of HMRC enquiries is that errors are not automatically penalised harshly.

HMRC distinguishes between:

Careless errors
Deliberate behaviour
Reasonable mistakes

An accountant helps position any errors correctly and transparently.

From experience early honest disclosure handled properly often reduces penalties or removes them entirely.

Trying to hide mistakes usually makes matters worse.

Managing Deadlines and Extensions

HMRC sets strict deadlines but they are not immovable.

Accountants regularly negotiate:

Extensions for document gathering
Revised timelines
Staged disclosures

This is especially important for businesses with complex records or historic issues.

From experience HMRC is far more receptive when dealing with a professional agent rather than an individual under stress.

Handling HMRC Interviews and Meetings

Some enquiries involve meetings or interviews.

These can be in person by phone or via video call.

An accountant will:

Prepare you in advance
Attend with you
Answer technical questions
Intervene if questions go beyond scope

This is crucial because statements made verbally carry weight.

From experience people often say too much when nervous. An accountant ensures discussions remain factual and relevant.

Dealing with HMRC Technical Language

HMRC correspondence is written in technical tax language.

Accountants translate this into plain English and explain:

What HMRC wants
What the risk level is
What outcomes are possible
What strategy makes sense

This clarity reduces anxiety and helps you make informed decisions.

Negotiating Tax Liabilities and Penalties

If additional tax is due an accountant plays a key role in negotiation.

This includes:

Challenging incorrect HMRC assumptions
Agreeing revised figures
Reducing penalties
Setting up time to pay arrangements

From experience penalties are often negotiable especially where behaviour was reasonable.

HMRC does not advertise this but accountants know how to apply the rules correctly.

Protecting You from Scope Creep

One of the biggest risks in an enquiry is scope creep.

This is when HMRC starts with one issue then expands into others.

Accountants manage this by:

Keeping responses tightly focused
Resisting unnecessary disclosures
Clarifying boundaries

From experience many enquiries escalate simply because too much information was volunteered.

HMRC Audits and Compliance Checks for Businesses

For businesses HMRC audits can involve full reviews of systems and processes.

This includes:

VAT compliance
PAYE accuracy
CIS treatment
Expense policies
Director loan accounts

Accountants help demonstrate that systems are reasonable even if not perfect.

HMRC is often looking for intent and control rather than perfection.

How Accountants Help After an Enquiry Ends

Support does not stop once the enquiry closes.

Accountants often:

Implement process improvements
Adjust bookkeeping systems
Strengthen record keeping
Provide future tax planning

From experience the best outcome is not just closing the enquiry but reducing the risk of another one.

The Cost of Using an Accountant During an Enquiry

Many people worry about cost when an enquiry starts.

I understand this concern but from experience the cost of not having representation is often far higher.

Professional fees are usually outweighed by:

Reduced tax liabilities
Lower penalties
Shorter enquiry duration
Reduced stress and time lost

Some people also have tax investigation insurance which can cover these costs.

Common Mistakes People Make Without an Accountant

From experience these are the most common mistakes I see when people try to handle enquiries alone.

Responding too quickly
Providing unnecessary documents
Misunderstanding the question
Making verbal statements without preparation
Missing deadlines
Admitting fault incorrectly

These mistakes often turn minor issues into major problems.

HMRC Enquiries in Practice for Bedford Clients

Working with Bedford based clients I see enquiries across a wide range of situations.

Small businesses growing quickly
Landlords with multiple properties
Directors using company funds informally
VAT registered trades
Self employed professionals

In almost every case early accountant involvement leads to a better outcome.

When You Should Contact an Accountant Immediately

You should speak to an accountant as soon as:

You receive an HMRC enquiry letter
HMRC requests documents
HMRC asks for a meeting
You realise an error may exist
You feel unsure how to respond

From experience waiting rarely helps.

The key takeaway

I have to say this clearly.

An HMRC enquiry is not the time to learn tax rules on the fly.

It is a formal legal process with financial consequences. Having an accountant involved changes the dynamic entirely. It brings structure calm and strategy to what can otherwise feel overwhelming.

In my opinion the true value of an accountant is not just in filing returns but in standing between you and HMRC when it matters most.

Handled properly an enquiry can end quietly and efficiently. Handled badly it can spiral into years of stress and cost.

If there is one thing I would emphasise it is this.

Get professional support early and let experience do the heavy lifting while you focus on running your life or your business.

To continue reading you may find Avoid These Costly VAT Errors: Bedford Accountants Expose Common Pitfalls and How to Choose the Right Accountant for Your Business in Bedford helpful. You can also browse all related guidance in our Bedford Accounting Hub.