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Hold the Line

Dealing With an HMRC Demand

A tax demand is not always right, and rarely as final as it looks. There are deadlines, appeal rights, and a difference between what HMRC estimate and what you actually owe.

A guide to using AI to assert your rights as a human, calmly and on the facts. We use AI to do this work. We suggest you do too.

Two ways to use this guide, both free

You do not have to use AI. These guides work on their own. AI just makes it faster.

1

Let Claude do the work

The AI assistant reads your letter, works out your stage, and drafts what you need to send. You just answer its questions.

Start with Claude →
2

Or do it yourself

Work through the stages at your own pace, in plain English. No AI needed.

Work through it yourself →

New to Claude, or not sure what it is? It is free, here is how to start.

Get the full experience

Turn Claude into your personal HMRC demands case manager

+

Tap the plus to set this up.

You can copy the prompts on this page into Claude one at a time. Or you can install the Case Manager skill once, and Claude will walk you through your whole case from start to finish, every time, without you having to explain it again.

  1. Download the skill file below.
  2. In Claude, open Customize in the left sidebar, then the Skills tab.
  3. Click the + button, choose Create skill, and upload the file. Claude reads it automatically.
  4. Make sure the skill is toggled on.
  5. In Cowork, type / to pick it, or just say what's happened and Claude will use it.
Download the skill file

Requires "Code execution and file creation" to be enabled in Settings. The skill stays private to your account.

Free Claude does not install skills, but you do not need it to. Copy the prompt below into Claude at claude.ai and it will act as your case manager for this conversation.

I have had a letter or demand from HMRC and I am feeling out of my depth. Act as my HMRC Case Manager and walk me through this slowly and calmly, one step at a time, the way a patient adviser sitting beside me would. Please do not overwhelm me: ask me only one or two questions at a time, and wait for my answer before you move on. First, reassure me, and explain in plain words that an HMRC letter is often not as final or as frightening as it looks. Then gently gather what you need, one thing at a time: what the letter is headed or called, the amount it mentions, the tax year it relates to, the reference number, any deadline or date on it, and what it actually says (I can type it out or describe it in my own words). Once you understand it, explain to me simply what kind of letter it is, and in particular whether it is an estimate (called a determination) or a real demand, what that means for me, and what my options are. Tell me the single most important thing to do first, and why. Then hold my hand through it: tell me exactly what to gather, write any letter, appeal, reasonable-excuse letter or Time to Pay proposal I need in full and ready to send, and explain clearly how and where to send it. Watch my deadlines at every step so I never miss one. Never tell me to just pay, and never rush me. At the end of each step, give me a short plain-English summary of what we have done and the one thing to do next. I am acting for myself and I want to come out of this feeling calm and in control.

Keep the conversation open and save the documents Claude produces. That is all you need to start.

Before anything else

An HMRC figure is a position, and positions can be wrong. You have the right to question it.

A brown envelope from HMRC carries a particular dread. The numbers look authoritative, the language is dense, and the instinct is either to pay whatever it says or to bury it. Both are mistakes.

Much of what HMRC issues when you have not filed or not engaged is an estimate, called a determination, not a calculation of your real liability. Estimates can be displaced by the actual figures. Genuine demands carry appeal rights and deadlines. And HMRC has a duty to consider affordable payment arrangements rather than push straight to enforcement.

The first move is to understand which kind of letter you are holding, and what clock is running.

Your first move, two minutes
1
Photograph the letter, every page, including the reference and any deadline.
2
Open Claude at claude.ai, free on any phone.
3
Copy the prompt below and paste it into Claude: "I have had a letter from HMRC and I do not really understand it. Act as my HMRC Case Manager and help me calmly, one step at a time. Ask me only one or two questions at a time and wait for my answer. Start by reassuring me, then ask me what the letter is called, the amount, the tax year, the reference, any deadline, and what it says in its own words. Then explain to me in plain English what it is, whether it is an estimate (a determination) or a real demand, what stage I am at, and exactly what to do first. Do not rush me, and never tell me to just pay."
4
Read the plain answer, then work through the stages below.
Tax law is the same across all four UK nations, so there is no country to choose here. But the deadlines are strict, so do not let the letter sit.

This is general guidance. Tax can be complex and the sums large, so for anything significant, get advice from a tax professional. Below is how to understand and respond to the common demands.

Do it yourself

Work through the stages at your own pace, in plain English.

HMRC demands come in a few recognisable forms, each with its own response and clock. The single most useful distinction is between a determination (HMRC's estimate when you have not filed) and an assessment or calculation of tax actually due. Estimates can be replaced by reality. Real demands are appealed on their merits.

A determination is not a statement of what you owe. It is HMRC's guess in the absence of your return. File the actual return, usually within the time limit, and the real figure replaces the estimate, which is often far lower.

Click each stage to understand it and see how to respond.

Understanding the Demand
1

A determination (an estimate)

Issued when you have not filed  ·  Replaceable
Often beatable
▼  What to do

If you missed a Self Assessment return, HMRC can issue a determination, its own estimate of the tax due. It is legally enforceable until displaced, but it is not your real liability. The way to beat it is not to appeal it but to file the actual return.

  • File the real return, submitting the actual Self Assessment normally supersedes the determination, usually if done within three years of the filing deadline (or twelve months of the determination, whichever is later). Ask Claude to help you understand the time limit for your year.
  • Gather your figures, income, expenses, allowances. The real number is frequently far below the estimate. Ask Claude to help you organise what you need.
  • Get the returns in even if late, late filing penalties are a separate, often reducible issue. Dealing with the determination is the priority. Ask Claude to sequence it.
Do not simply pay a determination assuming it is correct. Ask Claude: "HMRC sent me a determination for [tax year] of [£X] because I had not filed. Explain how filing the actual return replaces it and what the time limit is for me."

Would you rather Claude just did this for you? That is the easy route, and usually the best one. Tap below to copy a ready-made message, paste it into a Claude chat at claude.ai, and Claude takes it from there, writing whatever you need to send.

New to Claude? It is free, here is how.
2

An assessment or penalty you dispute

30-day appeal window  ·  Real rights
Appealable
▼  What to do

If HMRC assesses tax or charges a penalty you think is wrong, you generally have 30 days to appeal. You can ask HMRC to look again (a statutory review) and, if still unresolved, take it to the independent Tax Tribunal. You can also appeal a penalty if you had a reasonable excuse.

  • Appeal within 30 days, in writing, stating your grounds. Late appeals are possible with a good reason but harder. Ask Claude to draft the appeal.
  • Reasonable excuse for penalties, serious illness, bereavement, genuine reliance on someone who let you down, technical failures. Ask Claude to frame your reasonable excuse properly.
  • Ask for a statutory review, a fresh pair of HMRC eyes, free, before any tribunal. Ask Claude to request one.
  • Independent Tax Tribunal, if the review does not resolve it, the First-tier Tribunal (Tax) is independent of HMRC. Ask Claude to explain the steps and help prepare.
How to respond

Appeal in writing to the address or method on the letter, within the deadline. Keep proof. Ask Claude to draft the appeal, and to note your tribunal options if needed.

Would you rather Claude just did this for you? That is the easy route, and usually the best one. Tap below to copy a ready-made message, paste it into a Claude chat at claude.ai, and Claude takes it from there, writing whatever you need to send.

New to Claude? It is free, here is how.
3

A genuine debt you cannot pay in full

Time to Pay  ·  HMRC must consider it
Arrange it
▼  What to do

If the tax is really owed but you cannot pay it all at once, HMRC offers Time to Pay arrangements that spread the debt into affordable instalments. Engaging early, before enforcement, is far better than waiting.

  • Set up Time to Pay, often arrangeable online for Self Assessment under a threshold, or by phone. Ask Claude to help you prepare a realistic instalment proposal based on your income and outgoings.
  • Be realistic and honest, an arrangement you can actually keep is the goal. Ask Claude to help you build the budget.
  • Keep it in writing where you can, confirm what is agreed. Ask Claude to draft a confirmation.
Engaging stops escalation. Ask Claude: "I owe HMRC [£X] that I cannot pay at once. I can afford about [£Y] a month. Help me prepare a Time to Pay proposal."

Would you rather Claude just did this for you? That is the easy route, and usually the best one. Tap below to copy a ready-made message, paste it into a Claude chat at claude.ai, and Claude takes it from there, writing whatever you need to send.

New to Claude? It is free, here is how.
4

Enforcement and what HMRC can do

Real powers  ·  Still avoidable
Engage now
▼  What to do

If a real debt is ignored, HMRC has strong powers: taking the debt directly from your tax code, using enforcement agents in England and Wales (or sheriff officers in Scotland, the EJO in Northern Ireland), or court action. Engaging at any earlier stage almost always avoids this.

  • Direct recovery from earnings or tax code, HMRC can adjust your PAYE code to collect smaller debts. Ask Claude to explain how this affects you.
  • Enforcement agents (England & Wales), the same Schedule 12 rules and protections in the bailiff guide apply. They cannot force first entry. Fees are fixed.
  • Scotland and Northern Ireland, diligence by sheriff officers in Scotland, the Enforcement of Judgments Office in NI, with the protections set out in the bailiff guide.
  • It is rarely too late to arrange, even at enforcement stage, a realistic Time to Pay proposal can halt it. Ask Claude to help you make the case.
If enforcement has started, do not ignore it. Open Claude: "HMRC has moved to enforcement for a debt of [£X]. I am in [nation]. Help me propose a Time to Pay arrangement and understand my protections." If an agent attends, use Bailiffs at the Door.

Would you rather Claude just did this for you? That is the easy route, and usually the best one. Tap below to copy a ready-made message, paste it into a Claude chat at claude.ai, and Claude takes it from there, writing whatever you need to send.

New to Claude? It is free, here is how.

What the System Depends On

It depends on the authority of the letterhead. A figure from HMRC feels beyond question, so people pay estimates that are not real, miss appeal windows that were open, and avoid the phone call that would have set up an affordable arrangement.

An estimate is not a calculation. A demand carries appeal rights. A genuine debt can be spread. The powers behind it are real, but they sit at the end of a process you can redirect long before it gets there.

Open the letter. Work out which kind it is. Mind the deadline. Question what is wrong, arrange what is right.

Know someone facing this? Send them this page. It is free, and no one should face it alone.