What should a sole trader do if HMRC requests additional information?

Understanding what HMRC is asking for

When HMRC requests additional information, it can feel unsettling—especially for a sole trader who is juggling day-to-day business, clients, invoices, and (often) their own bookkeeping. But an information request is not automatically a sign that you have done something wrong. HMRC uses follow-up questions for many routine reasons: to clarify entries on a tax return, to confirm calculations, to check whether an expense is allowable, to verify income, or to resolve mismatches between what you reported and information HMRC holds from other sources.

The first thing a sole trader should do is slow down and read the request carefully. HMRC letters can contain multiple parts: a reference number, the tax year or accounting period being reviewed, the specific items they want explained, and a deadline for responding. Some requests are narrow—such as asking for evidence of a single expense—while others are broad, asking for records such as bank statements, invoices, or a breakdown of business mileage. It’s essential to identify exactly what is being requested so you can respond fully without providing unnecessary information that could confuse matters or widen the scope of enquiries.

It also helps to understand the type of request you have received. HMRC may ask for additional information simply to process your return, or as part of a compliance check (sometimes called an enquiry). The tone and structure of the letter often provides clues. If you are unsure which it is, you can contact HMRC using the contact details on the letter and ask what the request relates to and what outcome they are aiming for. Knowing whether this is a routine clarification or a more formal check affects how you prioritise your response and whether you should consider professional advice.

Check that the request is genuine

Before sending any documents, verify that the request is legitimate. Scams impersonating HMRC do exist, and they can look convincing. A genuine HMRC letter will typically include your Unique Taxpayer Reference (UTR) or other identifying details and will direct you to official channels. If you received the request by email, text, or a phone call that you were not expecting, be especially cautious. HMRC generally does not ask for sensitive information by email in an informal manner, and you should never click suspicious links or provide bank details based on an unsolicited message.

If you have any doubt, use an official route to confirm. You can log into your HMRC online account to see whether there are messages there, or you can contact HMRC using phone numbers published on the official government website rather than any number provided in a questionable message. Taking ten minutes to verify legitimacy can prevent costly mistakes.

Note the deadline and respond promptly

HMRC information requests usually come with a deadline. Missing it can escalate the situation, potentially leading to penalties or HMRC making decisions based on assumptions rather than your evidence. Even if you cannot gather everything by the deadline, it is usually better to acknowledge the request early and explain when you will be able to provide the documents. HMRC may agree an extension in some circumstances, particularly if the request is extensive or you need time to retrieve older records.

For a sole trader, organisation is the difference between a manageable response and a stressful scramble. Put the deadline in your calendar, set reminders, and plan backwards from the due date. Give yourself time to locate records, review them for accuracy, prepare explanations, and assemble everything in a clear format.

Don’t panic—and don’t guess

A common mistake is rushing to respond with incomplete information or guesses. If HMRC is asking about numbers, they typically want support from records, not recollections. Guessing can lead to inconsistencies that raise more questions. If you realise you made an error, that does not mean disaster, but you should handle it carefully: identify what happened, quantify it, and consider whether you should correct the return or explain the difference honestly in your response.

If you are uncertain about what HMRC wants, it can be better to ask a clarifying question than to send a large bundle of documents that do not directly address the issue. Clear communication often reduces the back-and-forth and helps HMRC close the matter faster.

Gather the right documents and evidence

What you gather depends on the request, but the goal is the same: demonstrate how you arrived at the figures on your return and show that the business transactions are real, business-related, and correctly treated for tax purposes. Typical evidence includes sales invoices, receipts, purchase invoices, bank statements, bookkeeping reports, mileage logs, and contracts or correspondence with clients.

As a sole trader, you should be prepared to show:

1) Proof of income: invoices issued, payment confirmations, bank deposits, payment processor statements (such as card payments), and any records of cash takings if you take cash.

2) Proof of expenses: receipts, supplier invoices, bank payments, credit card statements, and explanations of how the expense relates to the business.

3) A link between records and the tax return: a reconciliation or breakdown that shows how your total income and total expenses were calculated and posted into your accounts.

4) Records for specific claims: such as home office costs, business mileage, use of personal assets, capital allowances, or any reliefs claimed.

It is worth checking whether HMRC requested originals or copies. Often, copies are acceptable, especially digital copies. If you only have paper receipts, scan them or take clear photos. Keep the originals safe, and do not send original documents unless HMRC explicitly requests them and you can keep copies for yourself.

Review your return and reconcile figures

Before sending anything, compare the request against your tax return and records. The simplest way to reduce risk is to understand your own numbers fully. If HMRC is querying turnover, look at your sales ledger and bank deposits. If they are querying expenses, identify the line items and the receipts. If they are querying a particular category—such as travel, subsistence, or repairs—prepare a summary that lists the transactions, dates, suppliers, and amounts.

Reconciliation is particularly important if you have multiple income streams or you use payment platforms. For example, if you sell online, the amounts received into your bank may be net of fees, refunds, or chargebacks, and HMRC may see a mismatch between gross sales and banked amounts. A clear explanation that shows gross sales, less fees, less refunds, equals net receipts can resolve confusion quickly.

If your bookkeeping is not perfectly up to date, bring it up to date now. HMRC is far more likely to accept a coherent set of records than a pile of unorganised receipts. Even if you use basic spreadsheets, take time to structure them properly and ensure totals match what was reported.

Be careful with mixed personal and business transactions

Many sole traders use a personal bank account for business, particularly in early stages. This increases the complexity of any HMRC request because you may need to demonstrate which transactions are business-related and which are personal. If HMRC requests bank statements, you should be ready to annotate them or provide a schedule that categorises the transactions.

It can feel uncomfortable to share personal transactions, but if your business runs through a personal account, HMRC may need to see statements to verify business income and expenses. Where possible, provide only what is requested and explain clearly which items relate to the business. If a transaction is personal, label it as such without over-explaining. The key is to show that you have a method for separating business and personal use.

Going forward, consider opening a dedicated business bank account. While it may not be legally required in all cases for sole traders, it is often a practical step that simplifies recordkeeping and reduces stress if HMRC ever asks questions again.

Draft a clear, structured response

A strong response to HMRC is organised, polite, and precise. Think of it as helping the reviewer understand your business. A messy response can prolong the process even when your figures are correct. Aim to provide:

- A cover letter or message summarising what you are providing.

- A direct answer to each question in the order HMRC asked.

- A list of documents enclosed or attached, with filenames that are easy to follow.

- Explanations for any unusual items, one-off transactions, or estimates.

For example, if HMRC asked about a specific expense category, you might respond with a short paragraph explaining what the category includes, followed by a table listing each item and the supporting receipt reference. If HMRC asked about turnover, you might provide a breakdown by month, tied back to invoices and bank receipts.

Clarity reduces risk. Avoid emotional language or defensive statements. Even if you feel frustrated, keep the tone neutral and businesslike. Your objective is to close the information request with minimal disruption.

Only provide what is requested—but don’t omit what is necessary

There is a balance to strike. Providing too little can cause HMRC to ask again. Providing too much can introduce confusion or raise new questions. Start by answering exactly what was asked. Then ask yourself: will HMRC be able to follow the trail from the return to the records? If not, include the extra supporting material needed to make the answer complete.

For instance, if HMRC asks for evidence of specific expenses, sending just the receipts might not be enough if the receipts do not clearly show the business purpose. In that case, a short explanation and, where relevant, a related contract or booking confirmation may be appropriate. Similarly, if HMRC asks for invoices, include the corresponding proof of payment if the question is really about whether income was received and recorded.

Explain the commercial reality of your business

Sometimes the best way to resolve an enquiry is to help HMRC understand how your business works. Sole traders vary widely: tradespeople, consultants, designers, drivers, online sellers, tutors, therapists, and many others. Business models differ in how income is earned, how expenses arise, and what records exist.

If your business has seasonal peaks, explain that. If you take deposits and complete work later, explain how you recognise income. If you sometimes receive payments in cash, explain how you record cash takings. If you use a booking platform that pays out weekly, explain the payout cycle and fees. These details can prevent misunderstandings and can make your figures look more logical to someone unfamiliar with your industry.

Common areas HMRC queries for sole traders

Although every case is different, certain topics come up frequently for sole traders. Being prepared for these can help you frame your response.

Business expenses and allowable deductions

HMRC may query expenses that look personal or unusually high compared with turnover. Examples include mobile phone bills, travel, meals, clothing, entertainment, or home-related costs. The key issue is whether the expense was incurred “wholly and exclusively” for the purposes of the trade. Many expenses can be partly business and partly personal, in which case you must apportion them reasonably and consistently.

If you claim a portion of your phone bill, explain how you calculated the business percentage. If you claim home office costs, explain whether you used a simplified method or actual costs, and how you split the costs. If you claim vehicle costs, be clear whether you used mileage rates or actual running costs, and support it with a mileage log and/or receipts.

Turnover and undeclared income

HMRC may seek assurance that all income has been declared. This is common if your bank deposits do not appear to match turnover, or if HMRC has information from third parties. If you have non-business deposits (such as transfers from savings, loans from family, or refunds), label them clearly. If you have payment processor fees that reduce what hits your bank, provide a reconciliation.

Also consider whether you have any sources of income you overlooked, such as cash jobs, tips, platform earnings, referral fees, or small amounts that felt insignificant at the time. HMRC expects all taxable business income to be included, even if it’s small.

Capital allowances and assets

If you claimed capital allowances for equipment, vehicles, tools, computers, or machinery, HMRC may ask for purchase invoices and evidence of business use. If the asset is used partly personally, you may need to restrict the claim. Keep a record of purchase dates, costs, and how the asset is used in the business.

Use of home and simplified expenses

Home working is common and can be claimed, but it must be calculated correctly. HMRC may ask how you determined the portion of household costs used for business. If you used simplified expenses, be prepared to show the basis (for example, hours worked at home). If you used actual costs, be prepared to show the calculations and supporting bills.

Subcontractors and construction industry records

If you work in construction or use subcontractors, HMRC may ask about payments, contracts, and whether correct procedures were followed. Even outside construction, if you pay freelancers or subcontractors, keep invoices and evidence of payment. Be able to explain the nature of the work and why it was necessary for your trade.

Correct mistakes carefully and transparently

If, during your review, you discover an error in your return or records, it’s important not to hide it. Mistakes happen, especially for sole traders managing everything alone. What matters is how you handle it. If the error affects tax, you may need to correct the return or notify HMRC of the amendment. In your response, explain what went wrong, what the correct figure should be, and provide the evidence supporting the correction.

Being transparent can reduce the risk of HMRC assuming deliberate wrongdoing. If you are unsure about whether and how to amend a return, consider getting professional advice, particularly if the adjustment is significant or relates to complex areas like capital allowances, loss relief, or VAT.

Consider getting professional help

A sole trader can often handle a straightforward information request, especially if the request is limited and the records are tidy. However, there are situations where professional support is sensible:

- The request is part of a formal enquiry or compliance check.

- The amounts involved are significant.

- You have complex income streams, multiple businesses, or significant expenses.

- You used estimates or your records are incomplete.

- You feel unsure about what HMRC is asking or how to answer without causing issues.

An accountant or tax adviser can help you interpret HMRC’s questions, prepare a robust response, and ensure that explanations are accurate and appropriately worded. They can also act as an intermediary, which can reduce stress and prevent accidental misstatements. Even a short consultation can be valuable if you are uncertain about the technical treatment of certain items.

Keep communication professional and documented

When you correspond with HMRC, keep a record of everything you send and receive. Save copies of letters, emails, attachments, and notes of phone calls, including dates, times, and the name of the person you spoke with if available. If you post documents, consider using tracked delivery so you can prove they were sent and received.

If you submit information electronically, use consistent file naming and keep a folder with the exact documents you provided. For example, you might label files by tax year and category, such as “2024-25_Sales_Invoices.pdf” or “2024-25_Expenses_Travel_Breakdown.xlsx”. Clear records protect you if something gets lost or if HMRC later asks what you previously provided.

Be mindful of data protection and sensitive information

HMRC requests often involve sensitive personal and financial data. When sending documents, use the method HMRC specifies and avoid insecure channels. If you are uploading documents, ensure you are using an official portal. If you are posting copies, avoid sending originals unless explicitly required. If statements or invoices contain information irrelevant to the request, consider whether it is appropriate to redact it—but do so carefully. Over-redaction can look evasive, while no redaction at all can expose unnecessary personal details.

If you plan to redact, keep an unredacted copy for your own records, and ensure you are not obscuring information that HMRC needs to verify the figures. When in doubt, seek guidance before redacting heavily.

Prepare for follow-up questions

Even a strong response may lead to follow-up questions. That does not necessarily mean there is a problem; it may simply mean the HMRC reviewer needs one more piece of information to close the matter. Respond in the same structured way: answer the question, provide supporting evidence, and keep your tone neutral.

It can help to anticipate likely follow-ups. For example, if you claim significant travel costs, HMRC might ask about the purpose of trips. If you claim a proportion of household costs, they might ask how many rooms are used or how many hours you work from home. If you claim repairs, they may ask whether the costs were revenue (repairs) or capital (improvements). Being prepared saves time.

What to do if you cannot provide certain records

Sometimes records are missing. Receipts fade, invoices are lost, or a laptop fails. If you cannot provide a document, don’t ignore the request. Explain what happened and offer alternative evidence. For example, a bank statement may show the payment even if the receipt is missing. Emails, confirmations, supplier statements, or contracts may also help. If you paid cash, the situation is more difficult, but you may still have evidence of the transaction in messages or job notes.

If you routinely lack records, treat this as a turning point. HMRC expects businesses to keep adequate records, and repeated gaps can lead to adjustments or penalties. Improving your recordkeeping system—using accounting software, keeping digital copies of receipts, and maintaining a mileage log—will pay off in reduced stress and better financial control.

Understand the possible outcomes

After you respond, a few outcomes are possible:

- HMRC accepts your explanation and closes the matter with no changes.

- HMRC asks further questions or requests additional documents.

- HMRC proposes an adjustment to your taxable profit or tax due.

- HMRC opens a more detailed enquiry if they identify broader concerns.

If HMRC proposes an adjustment and you disagree, you generally have options to discuss it, provide more evidence, and, if needed, challenge decisions through formal routes. This is another point where professional advice can be valuable, especially if you feel HMRC’s interpretation is incorrect or if the issue involves complex tax rules.

Reduce the risk of future HMRC queries

Whether the request is resolved quickly or becomes more involved, it’s worth using the experience to strengthen your compliance and recordkeeping. HMRC requests often highlight areas where sole traders can improve.

Keep records consistently throughout the year

Set aside time weekly or monthly to update your books. Record income as invoices are issued and track payments as they arrive. Enter expenses promptly and store receipts digitally. Consistency prevents a year-end scramble and reduces errors that lead to queries.

Use a separate bank account for business

Separating business and personal transactions is one of the simplest ways to make your accounts clearer. It also makes it easier to reconcile turnover, track expenses, and show HMRC that your figures are grounded in records.

Keep a simple audit trail

An audit trail does not need to be complicated. It means you can trace each figure on your return back to supporting records. For income, you should be able to go from turnover to invoices and payment evidence. For expenses, you should be able to go from each category total to individual receipts and payments. For claims like mileage or home office use, keep a log and note how you calculated the total.

Be cautious with estimates and round numbers

Estimates are sometimes unavoidable, but HMRC may question them—especially if they materially affect profit. If you must estimate, document how you arrived at the figure and keep that documentation. Avoid using repeated round numbers without explanation, as it can look like guesswork.

Review your return before submission

Before filing, review your figures for reasonableness and consistency. Does the level of expenses make sense relative to turnover? Are there unusual spikes compared with previous years, and if so, can you explain them? Have you included all income sources? A short pre-submission review can prevent the most common triggers for HMRC questions.

Responding if the request feels unfair or overwhelming

Some sole traders feel that HMRC’s request is excessive or unclear. If you believe the request is disproportionate, you can ask for clarification about why the information is needed and whether a narrower set of documents would suffice. Keep your tone professional and focus on practical solutions. It may be reasonable to propose providing a summary first and then supplying underlying records if needed.

If the request is genuinely overwhelming—such as asking for extensive records over multiple years—consider seeking professional representation. An adviser can help negotiate scope, manage communications, and ensure that you do not inadvertently supply information in a way that complicates your position.

A practical step-by-step checklist for sole traders

To make the process manageable, here is a practical sequence you can follow:

1) Read the request carefully and highlight each question or item requested.

2) Verify the request is genuine using official channels if needed.

3) Note the deadline and schedule time to prepare your response.

4) Pull your tax return and accounts for the relevant year.

5) Gather documents that directly relate to each question: invoices, receipts, statements, logs.

6) Reconcile key totals (turnover, main expense categories) to underlying records.

7) Prepare summaries or breakdowns that make the evidence easy to follow.

8) Draft a cover letter that answers each question in order.

9) Double-check that the numbers match, that files are readable, and that you kept copies.

10) Send the response using the specified method and keep proof of submission.

11) Log what you sent and be ready to respond to follow-up questions.

Final thoughts

For a sole trader, an HMRC request for additional information is best treated as a structured administrative task rather than a personal judgement. The most effective approach is calm, organised, and evidence-led: understand what is being asked, respond on time, provide clear supporting documents, and explain anything unusual in plain language. In many cases, a well-prepared response resolves the matter quickly.

Even if you discover mistakes, the situation can usually be managed by correcting them transparently and improving your systems. The experience can become a prompt to tighten recordkeeping, separate business finances, and build a clearer audit trail—steps that not only reduce future HMRC queries but also give you a better handle on your business performance. If the request is complex or you feel out of your depth, professional advice can provide reassurance and reduce the chance of missteps. The goal is always the same: help HMRC understand your figures, demonstrate that your records support your return, and move forward with confidence.