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Illustrative case studies

What an HMRC enquiry looks like in practice: three cases

Most landlords have never seen an enquiry through to the end. These three composite cases show the letter, what the landlord feared, what the paperwork showed, and what actually happened. Details are changed; the pattern is real.

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Written and reviewed by BK VermaProfessional landlord · Property Accounting Specialist · Commercial Finance ConsultantReviewed 22 September 2026

Four landlords, four different letters, four different outcomes. Names, figures and details are changed and each story combines more than one real case, so nobody is identifiable and no outcome is a promise. What they show is how the paperwork, the letter and the reply fit together in practice.

Which is closest to you?
A nudge letter, income I didn’t declareA compliance check into my returnA certificate of tax position to signA company / limited-company landlord
1

The inherited flat

Nudge letter · six years · Let Property Campaign

The letter. Raj inherited his mother’s flat in 2019 and let it through an agent. He assumed the agent “dealt with the tax”. In 2025 HMRC wrote: it held information suggesting he had income from property, and enclosed a certificate of tax position.

What he thought. That he was in serious trouble, that the flat might have to be sold, and that signing the certificate would make it go away.

What we found. Six years of rent at about £11,000 a year, agent fees, a small mortgage and repairs he had never claimed. He had made a careless mistake, not a deliberate one, and no one had asked him yet: an unprompted, careless disclosure sits at the bottom of the penalty scale.

What happened. We did not sign the certificate. We replied to HMRC saying a disclosure would follow, registered for the Let Property Campaign, and prepared six years of figures with every allowable cost. He signed and submitted them himself. Tax and interest were due; the penalty was at the lowest end of the range for his behaviour, and HMRC accepted an instalment plan.

The lesson. The agent collects rent; it does not do your tax. And the letter that frightened him most was the one that saved him money, because he acted on it before HMRC opened an enquiry.

2

The mortgage interest query

Compliance check · one year · closed with no change

The letter. Priya received a compliance-check opening letter for her 2023–24 return. HMRC wanted to see the mortgage interest figure behind her finance-cost claim, and asked for the lender’s annual statements and her tenancy agreements within 30 days.

What she thought. That HMRC believed she had lied, and that she should send everything she had to prove otherwise: bank statements, receipts, emails.

What we found. Her figure was right. She had two buy-to-let mortgages and had added the interest from both correctly, but one lender’s statement showed a fee-and-interest total rather than interest alone, which HMRC’s data had matched differently.

What happened. We sent a short acknowledgement and asked for two extra weeks to obtain the second lender’s interest-only breakdown. She sent exactly what was asked for, complete, with a one-page covering note explaining the difference. HMRC closed the check with no amendment. Total elapsed time: seven weeks.

The lesson. Answer the question asked, completely and only. Sending everything you own turns a seven-week check into a seven-month one.

3

The one who nearly signed

Certificate of tax position · nothing to disclose · written reply

The letter. Tom, who lets a single house and files his own return, received a nudge letter about property income with a certificate of tax position. His return was correct; he had declared everything. He was about to sign and post the certificate.

What he thought. That signing was the quickest way to prove he was honest, and that refusing would look suspicious.

What we found. His return was right, but a signed declaration covers every year and every property. He had also let a room in his own home in an earlier year, under the £7,500 Rent a Room limit, and had never declared it because he did not need to. Correct, but a detail he had forgotten when he read the certificate as “have you declared everything”.

What happened. He did not sign. He replied in his own words: his returns were complete, the letting was fully declared, the earlier room letting was within Rent a Room and did not need reporting, and he was happy to provide statements if required. HMRC wrote back thanking him and closing the matter.

The lesson. A written reply can say everything a certificate says, without binding you to a form of words you have not checked against every year.

4

The company landlord

Company tax return check · one year · closed with no change

The letter. Meera holds three flats through a limited company she set up in 2021 to escape the Section 24 mortgage-interest restriction. HMRC opened a check into the company’s CT600 for the year, asking about the mortgage interest claimed and the movements on her director’s loan account.

What she thought. That incorporating had “flagged” her, that the company might be unwound, and that the money she had drawn from it would be taxed twice.

What we found. Nothing wrong. The company had correctly deducted the full mortgage interest as a business expense — which a company can, unlike an individual — and paid corporation tax on the profit. The director’s loan account was in credit: she had lent the company her deposit money and was drawing it back, which is not taxable income. What was missing was the paperwork tying the drawings to the loan.

What happened. We sent the company’s statutory accounts, the lenders’ interest certificates and a simple schedule of the director’s loan account showing every payment in and out. HMRC accepted the return as filed and closed the check.

The lesson. A company is taxed differently from a person: full interest relief, corporation tax on profit, and a CT600 rather than a Self Assessment return. But the same rule applies — keep the records that explain the figures, especially the director’s loan account, because that is where HMRC looks first.

What the four have in common

  • Each landlord replied in writing, before the deadline, and kept a copy.
  • Nobody signed a certificate of tax position.
  • Each sent HMRC exactly what was asked for, complete, and nothing more.
  • Each signed and submitted their own documents (or, for the company, its own return). We prepared; they stayed in control.

Where to go next

These are illustrative composites for education, not descriptions of any real client or a guarantee of outcome. Every enquiry turns on its own facts. This is general information, not advice on your own position.

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