HMRC Investigations Insider

I post here about how HMRC enquiries, investigations and disputes actually work, based on experience from both sides of the system. If you’re dealing with something sensitive and don’t want to discuss it publicly, you can make initial contact here: sites.google.com/view/hmrcin…

I've spent weeks writing about a system that can't tell people what they owe and can't take their money when they offer it. At some point, describing a problem stops being enough. So I've spent my evenings building something. A free calculator for Loan Charge liability under the new settlement terms - employer and employee side. I built it line-by-line directly from the new statutory instrument. You put your figures in, you get your liability back. All key terms and definitions are agreed with HMRC so it is as accurate as can be. It can give you an informed idea of what to expect - or be used as a basis for further checking if the figure is materially different when you receive your "offer". No paywall. No catch. No "book a call." It goes live this week. If your paperwork's in a drawer somewhere now is the time to dig it out!

The Loan Charge settlement machinery is nearly finished. Nearly is doing a lot of work in that sentence. The guidance has been published. The statutory instrument has been laid. On paper, the process is up and running . But settlements involving employers need one more piece: the employer settlement guidance. It hasn't appeared. There's no published timescale for it. And without it, a large slice of cases cannot conclude. Is it being held back for the Budget? Has it just slipped down the priority list? Nobody will say, and from where the taxpayer sits it makes no difference. Because here is the shape of it: the parts that generate announcements have been delivered. The part that lets people actually pay has not. The people in these cases made their decision long ago. They want to settle. They've accepted the liability, found the money, instructed advisers. And the system has left them standing at the till...

Something that compounds everything in this week's posts. While a Loan Charge case sits unresolved, interest keeps running. Not paused for the review. Not paused while HMRC take months (or years) to respond. Not paused while a file moves between caseworkers with no one progressing it. The settlement I wrote about on Tuesday: the client responded promptly at every stage. The figures have been with HMRC for months. The delay is entirely on HMRC's side. And every one of those months is added to the bill. Sit with that from where the taxpayer stands. You've accepted you owe an you are trying to pay but you can't make the system move any faster - and the cost of its slowness lands on you. The process was designed on the assumption that delay comes from the taxpayer when the reality is it often comes from the HMRC side.

Yesterday's post about a Loan Charge settlement HMRC can't seem to process seemed to resonate deeply. What stood out in the replies wasn't anger about the tax. It was exhaustion. People have been living with this for the best part of a decade. Unresolved. Recalculated. Passed between teams. Told to wait for a review, then told to wait again. At some point, delay stops being an administrative failing and becomes the harm itself. It almost feels like a purposeful personal attack - rather than just sheer negligence and poor service. People need an ending. The system doesn't seem built to give them one - and i'm not sure the Loan Charge Review and settlement scheme is the answer either.

We are currently trying to settle a Loan Charge case with HMRC. Not dispute it. Settle it. The client has accepted there is tax to pay and wants to resolve the position. You would think that was the easy part. Months on, we are still waiting. Correspondence goes unanswered. When figures do arrive, they don't reconcile with what was provided before, and nobody can explain the difference. The file appears to move between teams with no single person actually responsible for progressing it. Meanwhile the client sits in limbo - unable to plan, unable to move on, with interest running the whole time. I spent years inside HMRC. I know what a stretched compliance operation looks like from the inside. But there is something particularly difficult about a system that struggles to process the cases where the taxpayer is trying to hand over money. If this is the experience of someone cooperating fully, it is not hard to see why people lose faith in the process.

A strange feature of tax disputes. Sometimes the hardest cases to progress are not the ones where the taxpayer is fighting. They are the ones where the taxpayer has agreed to pay. More on that tomorrow.

HMRC disputes have a way of making normal people feel like criminals. That is one of the most difficult parts of the work. A letter arrives. It mentions penalties or prosecution. It asks for years of information. It uses formal language. Suddenly someone who has never been in trouble in their life thinks they are about to lose everything. Most cases are not like that. But the fear is real, and it affects how people respond.

One of the quiet truths about tax disputes. HMRC do not need to be right at the start. They just need enough to ask questions. The taxpayer then has to explain, evidence, reconstruct and persuade. That imbalance is built into the process. It does not mean HMRC are always wrong. But it does mean taxpayers need to be very careful about how they respond once the process starts.

I have seen cases where the taxpayer’s biggest mistake was not the original tax issue. It was trusting the process too much. They assumed HMRC would only ask for what they needed. They assumed silence meant progress. They assumed delay meant the issue was going away. They assumed being helpful would be rewarded. Unfortunately, those assumptions can be expensive.

A common mistake when dealing with HMRC is assuming cooperation means giving them everything they ask for. It does not. You can cooperate fully while still questioning scope, relevance and legal entitlement. In fact, that is often the safest approach. The aim is not to obstruct. The aim is to avoid turning a narrow enquiry into a wide one because nobody stopped to ask whether the request was valid.

Most people think the hard part of a tax dispute is the legislation. Sometimes it is. But more often, the hard part is proving ordinary things years later. Why someone travelled. Who made a decision. What advice was given. What a payment was for. Why a document says what it says. At the time, none of it felt important. Years later, it can become the entire dispute.