HMRC began writing to companies and their agents with a clear message: please check your Corporation Tax return. These letters are part of HMRC’s ongoing compliance activity and are being sent where HMRC believes the Corporation Tax liability declared in a company’s most recent return looks much lower than expected when compared with similar businesses.
If you have received one of these letters, it does not automatically mean HMRC thinks something is wrong. It is a warning and an opportunity; HMRC is giving companies time to review their figures, correct any mistakes, and explain their position before a formal compliance check is opened.
This blog explains why HMRC is sending these letters, who receives them, what action is expected, and how companies and agents can respond in a sensible and low risk way.
Why HMRC is doing this now
HMRC regularly compares tax returns across sectors. When a company’s tax bill stands out as unusually low, it triggers a closer look.
That does not automatically mean anything is wrong. There are plenty of legitimate reasons why one company might pay less tax than another. Timing differences, losses brought forward, group relief, capital allowances, or specific reliefs can all affect the final figure.
From HMRC’s point of view, though, the numbers look unexpected. Rather than jumping straight into an investigation, they are asking companies and agents to take another look themselves.
This approach gives businesses the chance to correct genuine mistakes voluntarily and explain their position before HMRC decides whether to step in.
Why both companies and agents receive the letter
If a company has an authorised agent, HMRC sends the letter to both parties.
Agents receive a list of the clients they act for who have been contacted. This is HMRC’s way of making sure advisers are aware and involved. It also reflects HMRC’s expectation that agents play an active role in checking returns and helping clients respond properly.
For agents, this is a prompt to reconnect with clients, revisit the figures, and make sure everything stacks up.
What the letter is actually saying
Stripped back, the message from HMRC is straightforward.
They believe the Corporation Tax shown on the return is much lower than expected. They want it checked, and they are warning that a compliance check may be opened within the next 12 months if the position is not clarified.
To give companies time, HMRC confirms it will not start a compliance check before the date stated in the letter. That window is your opportunity to review, correct, or explain.
If nothing happens by that date, HMRC will decide what to do next using the information it already has. That is rarely the best position to be in.
What HMRC expects you to do next
HMRC asks the company or its agent to review the relevant tax returns carefully and then respond.
There are really only two possible outcomes.
If you find an error, HMRC expects it to be corrected. If the amendment deadline is still open, you can amend the return. If it has passed, a voluntary disclosure should be made.
If you review the return and believe it is correct, HMRC still wants to hear from you. The letter includes contact details so you can confirm that the return has been checked and no errors have been found.
What HMRC does not want is silence. Ignoring the letter increases the chance of a formal compliance check later on.
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What if correcting the return means paying more tax?
If reviewing the return results in extra Corporation Tax being due, HMRC recognises that some companies may struggle to pay the full amount straight away.
The letter points companies towards HMRC’s guidance on paying by instalments. Depending on the circumstances, a Time to Pay arrangement may be possible.
Interest will be charged on any tax paid late, but dealing with the issue early usually limits the damage and prevents matters from escalating.
How penalties fit into this
HMRC is clear that penalties can apply where errors are found in a tax return.
Penalties are not automatic. They depend on behaviour. HMRC looks at how the error happened, whether it was careless or deliberate, and how the company acted once the issue was identified.
One important point in the letter is that any disclosure made after receiving it will be treated as prompted. This affects how penalties are calculated. While prompted disclosures usually attract higher penalties than unprompted ones, they are still far better than waiting for HMRC to uncover the issue during a full enquiry.
Why early action still makes a difference
Even though disclosures after the letter are classed as prompted, acting early is still very much in your favour.
Correcting mistakes before HMRC opens a compliance check often leads to a smoother process and lower overall costs. It also shows cooperation, which HMRC takes into account when deciding how to proceed.
On the other hand, delaying or ignoring the letter almost always increases risk. Once a formal enquiry starts, HMRC has wider powers and the process becomes more time consuming and stressful.
What if you are confident the return is right?
Even if you are happy that the return is correct, it is still important to reply to HMRC.
Confirming that the return has been checked shows cooperation. Where useful, explaining why the tax position differs from similar companies can help HMRC understand the situation and may prevent further questions.
Saying nothing, even when there is no issue, can easily be misunderstood.
How accountants can help
For accountants, these letters underline the value of careful checks and clear responses.
Rechecking the numbers, reviewing any reliefs claimed, and making sure assumptions hold up can sometimes uncover issues that were missed before. Accountants can also help draft a clear reply to HMRC and deal with any follow-up queries.
If HMRC later opens a compliance check, having evidence of early review and engagement can make the process far easier to handle.
Final thoughts
HMRC’s recent nudge letters asking companies and agents to recheck tax returns are not something to panic about, but they do require action.
They give businesses the chance to review their figures, address any issues, and respond before HMRC steps in. By acting within the timeframe and getting advice where needed, companies can avoid unnecessary enquiries, penalties, and disruption.
Handled properly, this is often the quickest and simplest way to move on.
