What happens if I receive a letter from HMRC?

What to do first when a letter from HMRC arrives

Getting a letter from HM Revenue & Customs (HMRC) can feel unsettling, even if you’ve done everything right. Your mind might jump to penalties, investigations, or a sudden tax bill. In reality, HMRC writes to people and businesses for lots of everyday reasons: they need missing information, they’re confirming something you reported, they’re updating your tax code, or they’re carrying out routine checks. The most important thing is not to ignore it.

Start by slowing down and dealing with it in a calm, methodical way. HMRC letters are often time-sensitive and can include deadlines. Missing a response date can lead to follow-up notices, estimated assessments, or penalties. Even when the letter is simply informational, it may affect your pay, benefits, or future filings. Treat every letter as something to action promptly.

Your first steps should be:

1) Read the letter fully at least once, then read it again more carefully. HMRC letters often include key details in a short paragraph or a boxed section—like a Unique Taxpayer Reference (UTR), a PAYE reference, a tax year, or a request for specific documents.

2) Identify what type of tax or service it relates to. HMRC covers Income Tax, National Insurance, PAYE, Self Assessment, Capital Gains Tax, Corporation Tax, VAT, tax credits, Child Benefit, and more. You want to be sure you’re thinking about the right area.

3) Look for the action request and deadline. Some letters say “no action needed,” while others ask you to pay, confirm details, register, file a return, or provide evidence.

4) Put the letter somewhere safe and create a simple record. Take a clear photo or scan, and note the date you received it. If you speak to HMRC, record the date, time, who you spoke to, and what was agreed.

5) Stay alert for scams. HMRC is widely impersonated. If something feels off—unusual payment methods, pressure to act immediately, or suspicious links—pause and verify through official routes before sharing information or paying anything.

Common reasons HMRC might write to you

HMRC letters vary hugely, but they typically fall into a few broad categories. Understanding the likely reason can reduce anxiety and help you respond appropriately.

Tax code notices (PAYE) are very common. If you’re employed or receive a pension, HMRC may adjust your tax code based on benefits in kind, estimated income, multiple jobs, or changes to reliefs. The letter may explain what changed and why. Sometimes you’ll need to correct something (for example, if a benefit no longer applies) so your pay isn’t taxed incorrectly.

Self Assessment reminders and filing notices are also frequent. You might receive a reminder to file your tax return, a notice to file (which creates an obligation), a statement of account, or confirmation of what you submitted. HMRC can also write because they believe you should be in Self Assessment—for example, due to self-employment, rental income, high income, or untaxed income.

Payments and arrears letters can relate to unpaid tax, late payment interest, or an outstanding balance. Sometimes the amount is small (like a rounding adjustment or interest), and sometimes it’s larger due to a missed payment or an estimated assessment.

Requests for information happen when HMRC needs clarification. This might be about income, expenses, employment status, a property sale, dividend income, or whether a claim is valid. They may ask for supporting documents like bank statements, invoices, receipts, contracts, or P60s.

Compliance checks are HMRC’s way of reviewing whether a return or claim is correct. A compliance check does not automatically mean wrongdoing. Many are routine or risk-based checks. However, they do require careful handling, because the way you respond can affect the outcome.

Penalties and surcharge notices may arrive if HMRC believes a deadline was missed or a return was inaccurate. Penalties have rules and can often be reduced or appealed if you have a reasonable excuse, or if HMRC’s assumption is wrong.

Registration or confirmation letters include things like assigning a UTR, confirming registration for Self Assessment, VAT, PAYE as an employer, or issuing activation codes for online services.

Refund or repayment letters sometimes tell you HMRC owes you money or has issued a repayment. These are generally positive, but you should still ensure the details are correct and be cautious if the letter asks you to take steps that don’t match your situation.

How to confirm the letter is genuine

Because scams are common, it’s wise to treat verification as part of your routine. A genuine HMRC letter usually includes your name and address, references relevant to the tax type, and clear instructions. That said, fraudsters can copy formats and logos. The safest approach is to validate the request without relying on any phone numbers, QR codes, or links printed on the letter if you feel uncertain.

Look for these red flags:

• Requests to pay using unusual methods such as gift cards, cryptocurrency, or money transfer services.

• Threats of immediate arrest, deportation, or bailiffs arriving “today” unless you pay right now.

• Spelling mistakes, odd grammar, or generic greetings where you’d expect your name.

• A demand to click a link to “confirm your identity” or “claim a refund” that doesn’t match how HMRC normally communicates.

• A sense of urgency designed to stop you thinking.

If you are unsure, verify by going directly to HMRC through official government channels: log into your online HMRC account using a browser and your normal route, or contact HMRC using contact details you source independently from official pages. Avoid replying to suspicious letters by providing personal or payment information until you’ve verified authenticity.

Understanding the type of HMRC letter you received

Knowing what you’ve received helps you decide what to do next. HMRC uses different kinds of communication, and each has different implications.

Informational notices tell you something has changed or confirm something has happened. These often say “keep this letter for your records” and do not ask for action.

Notices requiring action request you to file a return, provide information, register, correct details, or pay an amount by a certain date. These are the letters to prioritise.

Formal assessments and determinations set out a tax amount HMRC believes is due. Sometimes this is based on estimates. If you think it’s wrong, it is important to respond quickly because there are often strict appeal time limits.

Penalty determinations

Compliance check opening letters inform you HMRC is checking something. They typically state what is being checked (a tax return, a claim, a VAT period, employer records, etc.), what they need from you, and how to respond.

What happens next depends on the letter’s purpose

People often ask, “What happens if HMRC contacts me?” The answer depends on what the letter is about. Here are common scenarios and what the process usually looks like.

If the letter is about your PAYE tax code

A PAYE tax code letter usually means HMRC has changed how your employer or pension provider taxes you. This can happen when:

• You start or stop receiving benefits in kind (such as a company car or private medical insurance).

• You have more than one job or pension.

• HMRC estimates you will have other income (like savings interest) above certain amounts.

• You claim reliefs such as professional subscriptions, uniform costs, or marriage allowance, and HMRC updates them.

• You have underpaid tax in a previous year and HMRC is collecting it through your code.

What happens next is usually automatic: your employer applies the new code, and your take-home pay may change. If you believe the code is wrong—perhaps it includes a job you no longer have, or it assumes a benefit you don’t receive—contact HMRC and ask for a correction. Acting quickly can prevent months of incorrect tax deductions.

If the letter tells you to file a Self Assessment tax return

A “Notice to file” is significant because it creates a legal requirement to file a return for the tax year(s) listed, even if you think you don’t owe tax. Common reasons you might receive this letter include:

• You became self-employed or started freelance work.

• You received rental income.

• You had capital gains from selling shares or property (other than your main home in many cases).

• You received untaxed income such as certain overseas income.

• You crossed an income threshold that means HMRC wants a return, or you need to pay back something like Child Benefit through the High Income Child Benefit Charge.

Once the notice is issued, you generally need to either file the return by the deadline or contact HMRC to explain why a return is not required and request withdrawal of the notice (where appropriate). Ignoring it can lead to late filing penalties even if the tax due is zero.

When you file, HMRC will process your return, issue a calculation (sometimes called a tax calculation), and show any balance due. If you owe tax, you’ll be given payment options and deadlines. If you overpaid, you may get a repayment.

If the letter asks for payment

Payment letters can range from gentle reminders to more formal demands. The key is to identify what the amount relates to and whether it is correct. Sometimes balances include interest, and sometimes the figure is based on an estimate because HMRC did not receive a return.

If you agree you owe the amount, pay by the stated deadline using a secure method. If you can’t pay in full, HMRC may allow a payment plan (often called a Time to Pay arrangement) depending on your circumstances. The earlier you engage, the more options you typically have.

If you disagree with the amount, don’t ignore it. Instead, check your records and any previous correspondence. The letter might include how to challenge the amount, request a review, or appeal. If the amount is based on an estimated assessment because you haven’t filed, filing the missing return often corrects the position, but you should still pay attention to any appeal deadlines.

If HMRC opens a compliance check

A compliance check means HMRC is reviewing whether your tax affairs are correct. This can relate to Income Tax, Corporation Tax, VAT, PAYE, or other areas. The letter usually says what HMRC is checking and what information they need.

What happens next typically looks like this:

1) HMRC requests information. They may ask for documents or explanations: invoices, receipts, bank statements, bookkeeping records, contracts, mileage logs, or details of a specific transaction.

2) You respond and provide evidence. Clear, organised replies can speed things up. It’s often helpful to answer exactly what they asked, in the format requested, and to keep copies of everything you send.

3) HMRC may ask follow-up questions. If something is unclear, they may request more information or a meeting. Sometimes they will narrow the check to a specific point, or they may broaden it if they discover additional issues.

4) The check concludes. HMRC will either confirm everything is fine, or they will propose adjustments. If additional tax is due, they will explain how they calculated it and whether any penalties apply.

During a compliance check, it matters how you communicate. If you made an error, being cooperative and correcting it can affect how HMRC views the behaviour (for example, careless versus deliberate). That can influence penalties. If you believe HMRC is wrong, you can explain your position and provide supporting evidence, and there are formal routes to challenge decisions.

If the letter is about a penalty

Penalty letters often cause the most worry, but many penalties are triggered automatically based on deadlines and HMRC’s records. Common examples are late filing penalties for Self Assessment returns and late payment penalties for outstanding tax.

If you receive a penalty notice:

• Check the tax year and the specific obligation. Sometimes penalties are for a return you didn’t realise you had to file, or for a period after you stopped trading but didn’t formally notify HMRC.

• Check HMRC’s timeline. If you filed or paid on time, gather proof (submission receipts, bank confirmations, screenshots of payments, etc.).

• Consider whether you have grounds to appeal. Appeals can be possible when you have a reasonable excuse, when the penalty is incorrect, or when HMRC didn’t process something properly.

• Respond within the stated time limit. Penalty appeals have deadlines, and missing them can make the process harder.

Even when a penalty is valid, you might be able to reduce it by putting things right quickly, especially in cases involving inaccuracies where disclosure and cooperation can matter.

If the letter is about suspected underpayment or an assessment

HMRC may write because it believes you underpaid tax. This can happen if information from employers, banks, pension providers, or other sources doesn’t match what was reported, or if HMRC believes a return is incomplete.

The letter may include an assessment amount or ask you to review a calculation. Your job is to check whether HMRC’s assumptions are correct. For example:

• Did you have more than one job and the personal allowance was allocated incorrectly?

• Did you receive interest, dividends, or other income you didn’t report?

• Did you sell an asset and forget about Capital Gains Tax implications?

• Did you claim expenses that HMRC believes are not allowable?

If HMRC issues an assessment and you disagree, you usually need to challenge it within a set time. Gather evidence, explain clearly, and consider professional advice if the amounts are significant or the issues are complex.

How to respond effectively to HMRC

When HMRC writes to you, your response should be accurate, organised, and timely. Whether you are replying by letter, online message, or phone, the goal is to resolve the matter with as little friction as possible.

Be specific. Always quote the reference numbers, tax year(s), and any case reference shown on the letter. This helps HMRC route your response correctly.

Answer the question asked. HMRC letters often request specific items. Provide exactly those items first. If you add extra information, make sure it is relevant and clearly labelled.

Provide evidence in a tidy way. If you are sending documents, create a simple index: “Document 1: bank statement (April–June), Document 2: invoice list,” and so on. Label files clearly if you are submitting electronically.

Keep copies of everything. Retain the letter, your reply, and supporting documents. If you send a physical letter, consider recorded delivery or another method that gives you proof of posting and delivery.

Be honest. If you made an error, acknowledge it and correct it. Trying to explain away an obvious mistake can make things worse and can affect how HMRC interprets your behaviour.

Don’t guess. If you’re unsure, check your records. If you genuinely don’t know, say so and explain what you are doing to find out. Providing guessed numbers can create new inaccuracies.

Should you call HMRC or reply in writing?

Calling HMRC can be useful when you need quick clarification, such as understanding what a letter means, what documents are required, or how to make a payment. A phone call is also helpful if the issue is simple and you can resolve it immediately—like correcting a tax code or confirming a date.

Writing (or using secure online messaging where available) can be better when the matter is complex, when you need a paper trail, or when you’re disputing an amount. Written responses give you time to structure your explanation and attach evidence. They also reduce the risk of miscommunication.

A practical approach is to call for clarification, then follow up in writing with the agreed summary and documents if needed. If you do call, keep notes of what was said, and ask for confirmation of any important points.

When you should involve an accountant or tax adviser

Many HMRC letters are manageable on your own, especially if they relate to straightforward PAYE changes or routine reminders. However, there are times when professional support is sensible:

• You’ve received a compliance check letter and the issues involve multiple years, significant sums, or complicated areas like employment status, overseas income, or capital gains.

• You’ve been issued an assessment or penalty you disagree with and you need to appeal.

• You have incomplete records, mixed personal and business spending, or uncertainty over allowable expenses.

• The letter references legal powers, formal information notices, or potential enforcement action.

• You’re worried because you suspect past returns may be incorrect and you want to disclose and correct matters properly.

An adviser can help you respond in a way that is accurate and appropriately framed, and can communicate with HMRC on your behalf where authorised.

What if you ignore an HMRC letter?

Ignoring HMRC is rarely a good idea. The consequences depend on the type of letter, but they can escalate. If you ignore reminders to file a tax return, HMRC may issue late filing penalties and, eventually, create estimated assessments based on what they believe you owe. These estimates can be higher than reality, and you may then need to do extra work to correct them.

If you ignore payment demands, the debt can grow due to interest and late payment penalties. HMRC may also move towards more formal collection processes. Even if you plan to dispute the amount, you should engage with HMRC and follow the appropriate steps rather than letting the issue drift.

If you ignore information requests during a compliance check, HMRC may draw conclusions based on limited data, extend the enquiry, or use formal powers to obtain information. Cooperation and timely responses usually lead to a smoother process.

What happens if HMRC says they want more information?

If HMRC asks for more information, it doesn’t automatically mean they think you’ve done something wrong. It often means something wasn’t clear, or they need evidence to support a figure or claim. The best response is to provide what’s requested, along with a clear explanation.

For example, if HMRC queries business expenses, they may want to confirm the expense is wholly and exclusively for business purposes. A good response might include:

• The relevant receipts or invoices.

• A short explanation of what the expense was for and why it was necessary for your work.

• A breakdown showing how you calculated the amount if it’s an apportionment (for example, home office costs).

If you can’t provide a document, explain why, and offer alternatives: a bank transaction record, supplier correspondence, or a reconstructed schedule based on available evidence. The key is to be transparent and proactive.

How long does HMRC take to respond?

Timeframes vary widely. Some issues are resolved quickly, especially tax code corrections, straightforward clarifications, or processing of submitted information. Compliance checks and disputes can take longer, particularly if multiple questions arise or if HMRC needs to review detailed records.

While waiting for a response, keep an eye on deadlines. If HMRC has given you a date to reply by, meet it—even if you can only send a partial response. In that case, explain what is missing and when you will provide it. If you need more time, ask as early as possible and keep proof of your request.

What if the letter relates to your employer, payroll, or employment status?

Sometimes HMRC writes to individuals or businesses about PAYE, payroll reporting, benefits in kind, or employment status. If you’re an employee, you may receive letters about underpaid tax, benefits, or tax code changes based on information from your employer. If you run a business, HMRC might ask about payroll records, Real Time Information submissions, or whether someone should be treated as employed or self-employed.

If the letter concerns employment status, it can be more complex because HMRC will look at the reality of the working relationship: who controls the work, whether there is a right of substitution, financial risk, how integrated the worker is into the business, and how the contract operates in practice. If you receive a letter in this area, it may be worth getting professional advice, because the outcomes can affect tax and National Insurance.

What if the letter is about property, rental income, or capital gains?

Property-related letters can involve rental income reporting, stamp duty queries, or capital gains from selling property or other assets. People sometimes assume HMRC only cares about wages, but property transactions can trigger reporting obligations and cross-checks.

If you receive a letter about rental income, HMRC may be asking whether you’ve declared it, or they may want to confirm expenses claimed. Gather tenancy agreements, letting agent statements, mortgage interest statements where relevant, repair invoices, and a schedule of income and expenses by tax year.

If the letter relates to a property sale, HMRC may be checking whether Capital Gains Tax is due and whether any relief applies. The documentation might include completion statements, purchase documents, evidence of periods of main residence, and records of improvements (not routine repairs). These matters can be nuanced, so clear records help.

What if HMRC says you’re owed a refund?

Refund letters are usually welcome, but still require care. Make sure the refund relates to you and the correct tax year. If HMRC says it has issued a repayment, check your bank account and ensure the details match. If the letter asks you to “claim” a refund, treat it cautiously and verify through your HMRC online account rather than clicking links or providing details to an unsolicited contact.

If you believe you are owed a refund but the amount seems wrong, check your payslips, P60, pension statements, and any taxable benefits. Overpayments can happen due to changing jobs, incorrect tax codes, or emergency tax situations. Sometimes HMRC’s calculation can be corrected by updating information, and sometimes you may need to file a return or submit a claim.

Appeals, reviews, and your options if you disagree

If you think HMRC’s letter is based on incorrect information, you often have options. The letter may explain how to appeal, request a review, or provide evidence to correct the record. The exact route depends on what the letter is: a penalty, an assessment, a tax code change, or a decision in a compliance check.

In general, you should:

• Act quickly and note the deadline for challenge.

• State clearly what you disagree with and why.

• Provide evidence and calculations where needed.

• Keep the tone factual and professional.

Sometimes a misunderstanding can be resolved simply by updating HMRC with accurate details. Other times, a formal appeal is needed. If large sums are involved or the issue is technical, professional advice can help you choose the best route and present your case effectively.

Practical checklist: responding to an HMRC letter step by step

Use this checklist to keep the process under control:

Step 1: Identify the type of letter. Tax code? Filing notice? Payment demand? Compliance check? Penalty?

Step 2: Note key details. Tax year(s), reference numbers, deadlines, amounts, and exactly what HMRC is asking for.

Step 3: Verify authenticity. Especially if payment is involved or the letter seems unusual.

Step 4: Gather records. Payslips, P60s, P45s, bank statements, invoices, receipts, accounts, contracts, property documents—whatever relates to the letter.

Step 5: Draft a clear response. Answer the questions in order. Include a short summary at the top and attach evidence with labels.

Step 6: Send and keep proof. Keep copies, get proof of posting, or save submission receipts.

Step 7: Monitor follow-up. Watch for replies, updated statements, or changes in your online account. If you don’t hear back and the matter is urgent, follow up with HMRC.

Staying calm and staying organised

Receiving a letter from HMRC is not automatically a sign that you’re in trouble. Most letters are part of the normal running of the tax system. What matters is how you respond. By reading the letter carefully, verifying it is genuine, meeting deadlines, and providing clear information, you can usually resolve issues efficiently.

If the letter is simple—like a tax code update or a reminder—you may only need to check the details and take a small action. If it’s more serious—like a compliance check, assessment, or penalty—approach it as a project: gather evidence, keep good records, respond clearly, and seek professional help if the stakes or complexity justify it.

The best outcome comes from engagement. HMRC processes are designed around timelines and documentation. When you reply promptly and accurately, you reduce the risk of escalation, avoid unnecessary penalties, and get to a resolution faster. The letter is a prompt to act, not a verdict—and in most cases, you can navigate it confidently with a structured approach.