Intro
If you’re self-employed (or you run a small business) you might recently have seen a letter from HM Revenue & Customs (HMRC) suggesting that you may have failed to disallow the private proportion of certain expenses. The troubling twist? These letters are landing in inboxes simply because the recipient has self-employment income — without any check that the specific tax return actually made or should have made such an adjustment.
The result: confusion, worry, and possibly unnecessary work. At Seagrave French we believe this blanket approach is unfair – and we’re here to explain what’s happened, what you should do (and not do), and how you can protect yourself from a more aggressive HMRC enquiry culture.
Why you’re seeing this letter
-
HMRC have flagged “private use of business expenses” as a growing risk area: things like home-office costs, phone bills, vehicle usage, or utilities where business and private use mix.
-
The foundational tax principle is that expenses must be incurred “wholly and exclusively” for business purposes to be allowable.
-
The problem: HMRC’s latest letters appear to have been generated purely on the criterion “you are self-employed”, not on a prior check that your tax return shows the relevant type of disallowance or that you claimed only agreed flat-rates.
-
In other words: You may be completely compliant – yet HMRC’s letter makes you feel you’re under suspicion. And that’s unnecessary stress.
What this means for you
-
Don’t panic. Receiving a letter doesn’t automatically mean you did anything wrong.
-
Don’t assume you must respond immediately in depth. Before launching into spreadsheets, gather some facts and check with us.
-
Let us check your records. We’ll review whether:
-
You claimed the correct proportion of mixed-use costs (home office, phone, car)
-
You used simplified expenses / agreed rates accurately
-
Your records support your claim
-
-
Be prepared. Even if you’re compliant, HMRC may follow up. Better to be ready than reactive.
Why we believe this blanket campaign is problematic
-
It creates unnecessary anxiety for perfectly good taxpayers.
-
It uses HMRC resources inefficiently when many recipients may have nothing to correct.
-
It may generate additional professional fees for no benefit.
-
It signals a shift toward more aggressive enquiry practices – not just for high risk cases but for standard returns.
How to stay protected (and sleep soundly)
- Maintain clear records. If you’re claiming a portion of a mixed-use cost (e.g., home utilities, phone bills, vehicle use) make sure you have sensible apportionment and evidence. See HMRC’s rules on “wholly and exclusively” and apportionment.
- Use simplified expenses where applicable. They can reduce the complexity of apportioning costs.
- Ask us to check your return. If you receive a letter, forward it to us and we’ll assess the situation; this may save unnecessary worry or fees.
- Consider Fee Protection Insurance. Because enquiry volumes are going up, and you may face HMRC correspondence even if you are compliant, fee protection insurance can cover the cost of us defending your position. It’s a cost-effective way to avoid an unwanted surprise.
- Stay calm and informed. A letter isn’t a verdict – it’s a prompt. Together we’ll check your position and decide the right response.
Final word
At Seagrave French our motto is: “Sleep Soundly – We’ve Got You Covered.” If you get one of these letters from HMRC, don’t let it interrupt your peace of mind. Let us step in and help you review, respond if needed, and ensure you’re fully protected.
Want us to check your position now? Contact us via or call and let’s make sure you’re ahead of the curve.
