Budget 2026: what it means for you and your business —
In short
If HMRC opens an enquiry into your tax return, do not reply in isolation and do not ignore it. What you disclose, and how, materially affects both the outcome and the penalty you pay. LMJ Group’s chartered advisers manage HMRC enquiries end to end — from routine aspect checks to full Code of Practice 9 investigations — and handle voluntary disclosures, which almost always produce a better result than waiting to be found.
Three things, in this order.
1. Do not reply straight away. There is no benefit in a fast, unconsidered response, and a great deal of risk in one. HMRC’s opening letter is often deliberately broad.
2. Check what kind of enquiry it is. An *aspect enquiry* looks at one item on a return. A *full enquiry* examines the whole return. A Code of Practice 9 letter means HMRC suspects deliberate conduct and is offering the Contractual Disclosure Facility — that is a serious matter requiring specialist help immediately.
3. Get representation before you engage. Once we act, HMRC deals with us. We control what is disclosed, when, and in what form.
This is the most commonly missed rule in the regime, and it costs owners real money.
The £50,000 and £250,000 limits are divided by the number of associated companies under common control, plus one. With one associated company they halve to £25,000 and £125,000. With three associates, they quarter.
So a group of small companies, each individually modest, can find itself paying the main rate on profits that a standalone company would pay 19% on. If you control more than one company — including dormant or property-holding companies — this needs checking.
Some enquiries are random. Most are not. HMRC’s Connect system cross-references your return against a very large amount of third-party data — bank interest, Land Registry, DVLA, online marketplaces, payment processors, and overseas accounts under the Common Reporting Standard.
Common triggers include figures inconsistent with your sector, a sharp change in reported profit, undeclared property or crypto disposals, large or unusual expense claims, persistent losses, and R&D claims that do not stand up to scrutiny.
If you know something is wrong, almost always yes — and the sooner the better. Penalties are calculated in large part on whether a disclosure is prompted (HMRC came to you) or unprompted (you came to them), and the difference is substantial.
HMRC operates several disclosure routes, including the Digital Disclosure Service, the Worldwide Disclosure Facility for offshore matters, and the Contractual Disclosure Facility under COP9. Choosing the right route matters. We assess your position confidentially first, then advise.
It depends on the behaviour HMRC establishes. Broadly: 4 years where reasonable care was taken; 6 years where the error was careless; and up to 20 years where the conduct was deliberate. Offshore matters have their own extended time limits.
This is precisely why the *characterisation* of the behaviour is the single most important battleground in any enquiry — it drives both how many years are opened and the level of penalty.
Penalties are a percentage of the tax lost, and are driven by three things: whether the behaviour was careless or deliberate, whether the disclosure was prompted or unprompted, and the quality of your cooperation — telling, helping and giving access.
That third element is where good representation earns its fee. A well-managed disclosure with full cooperation can reduce a penalty very significantly, and in some cases to nil. A poorly handled one can do the opposite.
Call us on 0330 390 5959 before you respond. An initial conversation is free and confidential, and the earlier we are involved, the more options you have.
We deal with HMRC, so you don’t. Correspondence, meetings and negotiation are handled by us.
Full range — from a single aspect check through to Code of Practice 9 investigations.
Disclosure done properly — the right facility, the right sequence, the right penalty position.
Chartered (ICAEW) and discreet — handled confidentially, without judgement.
We tell you the realistic outcome — not the one you would like to hear.
This page provides general information about the 2026/27 UK tax year and is not advice on your particular circumstances. Tax and regulatory rules change frequently. Please contact us before acting, or refraining from acting, on anything set out here. LMJ Group is a firm of Chartered Accountants regulated by the ICAEW. LMJ Group is not a registered auditor and does not provide audit services. Last reviewed: July 2026.
