When James opened the brown HMRC envelope, he didn’t expect his heart rate to spike.

He’s a successful founder: UK company, overseas investments, a trust, a carried interest structure, a couple of properties in Europe. He has a Big 4 firm on speed dial and a family office that keeps his spreadsheets immaculate.

The letter looked innocent enough – a polite reminder from HMRC to make sure that his tax returns are “correct and complete” and that any legal interpretation used in his filings is “correct in both fact and law”. It suggested that he might benefit from reading some new “Guidelines for Compliance (GfC13)”.

James’ first instinct?

“Surely this is just a generic mailshot. My accountant filed everything.”

But that’s exactly the mindset HMRC is now challenging.

This article takes that HMRC letter – and the underlying GfC13 guidance – and translates it into practical terms for wealthy individuals, internationally mobile clients and business owners. It’s based on the recent ICAEW coverage and the underlying HMRC publications, with a view from the advisory side.

1. What is GfC13 – and why is HMRC writing now?

In September 2025, HMRC published Guidelines for Compliance (GfC) 13: “Help ensuring documents filed with HMRC are correct and complete”.

Key points from the guidance and the ICAEW commentary:

• GfC13 sets out steps taxpayers should take to be able to sign the declaration that tax returns and other documents submitted to HMRC are correct and complete. 
• It applies across all taxes and to any document where you are declaring that it is correct and complete – not just self assessment.
• HMRC is clear that this is not a change in the law; rather, it is a more detailed explanation of its existing view of what “good behaviour” looks like in practice.

On the back of GfC13, HMRC has now written directly to “wealthy taxpayers”, reminding them that:

• They remain personally responsible for the accuracy and completeness of their returns, even where an agent is acting.
• Where they rely on a legal interpretation, it should be based on all relevant facts and they should honestly believe that, where there is more than one possible interpretation, the one used is – on balance – the most likely to be found correct by the courts or tribunals.
• If they file a return they “don’t reasonably believe to be correct”, this will be taken into account in deciding whether to charge penalties for inaccuracies.

HMRC also “invites” recipients to read GfC13 and to complete an anonymous survey – but that’s not the main story. The main story is behavioural: HMRC is signalling that the days of “we’ll take the most aggressive arguable view and see what happens” are over.

2. The story behind the letter: James’ “perfectly normal” structure

Let’s go back to James.

Over the years, his affairs have grown organically:

• A UK trading company with complex remuneration (shares, options, carried interest).
• A family investment company holding a portfolio including offshore funds.
• A trust created for succession planning.
• A non-UK property held through a foreign entity.
• Some “creative” planning around what is UK-source and what is not.

Each piece was signed off by someone – sometimes by a large firm, sometimes by a boutique, occasionally by a barrister’s opinion commissioned years ago.

When James forwards HMRC’s letter to his adviser, the initial reaction is:

“This is probably just HMRC nudging everyone. Don’t worry.”

But GfC13 asks a much sharper question:

If you had to stand in front of a tribunal and explain your return, are you genuinely satisfied – on the facts and the law – that your filing position is the most likely correct?

That is a much higher bar than “a QC once said this might work”, especially if:

• facts have evolved,
• structures have been “repurposed” over time, or
• the original opinion was heavily caveated and now sits in a drawer.

3. Novel vs improbable interpretations – and why HMRC cares

The earlier ICAEW analysis of GfC13, and HMRC’s own wording, draw an important distinction between “novel” and “improbable” interpretations of the law:

• A novel interpretation is one that courts or tribunals have not yet considered. HMRC accepts that genuinely new issues arise, especially in fast-moving areas such as crypto, complex financial instruments, or digital business models.
• An improbable interpretation is one the taxpayer believes a court is unlikely to accept.

HMRC’s position is fairly stark:

• Taking a novel position may be acceptable – but only if, having taken proper advice, you genuinely believe that a court is most likely to agree with it.
• Filing on an improbable interpretation is not acceptable; HMRC says you should not submit a return based on an interpretation you think a court would probably reject.

For clients like James, this is where the real work lies:

• Which positions in the last few years are borderline?
• Where is the analysis thin because “everyone in the market does it this way”?
• Where has commercial reality shifted so far from the original advice that the opinion is effectively obsolete?

4. Reasonable care, enquiry windows and penalties

This is not just about theory.

The concept of “reasonable care” has been in the UK tax system for a very long time, and ICAEW has previously explained both its practical meaning and its effect on HMRC’s powers:

• Failing to take reasonable care can extend HMRC’s enquiry window on a return from four to six years.
• It also affects penalty ranges for inaccuracies – the difference between “careless”, “deliberate but not concealed”, and “deliberate and concealed” behaviour is significant in both percentage and reputational terms.
• In some cases, HMRC has argued that failing to obtain a second opinion – where the stakes are high and the position is aggressive – is itself evidence of a lack of reasonable care.

Separately, HMRC already reminds taxpayers that errors can lead to interest and penalties, with scope for reductions where the taxpayer comes forward promptly and cooperates in putting things right,

GfC13 and the recent HMRC letters sit on top of that framework. They don’t change the law, but they will be highly relevant to how HMRC assesses whether you:

• took reasonable care,
• acted deliberately, or
• ignored obvious risk signals.

5. What HMRC expects you (and your adviser) to do in practice

HMRC’s GfC13 and associated guidance do contain practical suggestions. Stripped of civil service language, the expectations for higher-risk taxpayers look roughly like this:(GOV.UK)

a) Get the facts right – and documented

• Ensure you have identified all relevant facts – not just the ones that support the tax outcome you’d like.
• Check the wording of contracts and legal documents; don’t rely solely on how people think things work in practice.
• For complex valuations, consider using professional valuers and retaining full valuation files.

b) Take a disciplined approach to legal interpretation

When the tax position depends on how the law applies to your facts, HMRC expects you to:

• Use all proper sources: legislation, case law, HMRC guidance and, where appropriate, professional advice.
• Ask whether the advice is based on your actual facts or on assumptions.
• Challenge your adviser gently:
  • “If this went to tribunal, what do you think the probability of success really is?”
  • “Have you considered alternative interpretations and why you rejected them?”

c) Align the level of care with the level of risk

The steps you take should be proportionate to:

• the complexity of the arrangements;
• the tax at stake; and
• the degree of legal uncertainty.

A simple employment income case will not be treated in the same way as a nine-figure restructuring – but wealthy, globally mobile individuals and owner-managers can easily stray into the “complex and high-value” category without really noticing.

d) Don’t treat advice as a shield

GfC13 is very clear that:

• Taking professional advice helps, but does not transfer responsibility away from the taxpayer.
• Advice based on incomplete facts, or obtained from someone not truly competent in the relevant area, may not protect you – and may even count against you if you have ignored obvious red flags.

6. Back to James: turning a nudge into an opportunity

So what did James do with his letter?

Instead of filing it away, he treated it as a prompt for a structured review. Working with his advisers, he:

1. Mapped the sensitive areas
   • Non-UK entities with UK connections.
   • Old “legacy” structures (especially where the original promoter has long since disappeared).
   • Any arrangements where the tax outcome relies on a particularly favourable reading of unclear rules.

1. Re-read the original advice
   • Was it clearly based on full, accurate facts?
   • Were critical assumptions still valid?
   • Did the adviser flag that the position was finely balanced, or that HMRC was likely to disagree?

1. Benchmarked against current law and HMRC practice
   • Have there been relevant legislative changes or important cases since the advice was given?
   • Has HMRC guidance shifted in a way that makes the original filing position more exposed?

1. Documented a clear “filing rationale” for each sensitive area
   • Why is this position more likely than not to be correct in law?
   • If it’s genuinely borderline, should that be disclosed, or should a more conservative position now be adopted?

1. Planned ahead
   • For future transactions, he agreed internal rules:
     • no significant structures without written technical analysis; 
     • no adoption of a novel interpretation without a clear probability assessment and explicit sign-off.

The result? No guarantee of immunity, of course – but a much stronger footing if HMRC ever raises questions, and a clear demonstration that he is behaving exactly in the way GfC13 envisages.

7. What you should do now if you receive (or expect) this sort of HMRC letter

Whether you are a UK-resident HNW individual, an entrepreneur with cross-border structures, or a senior executive with complex packages, the practical checklist is similar:

1. Do not ignore the letter
   It may be “educational” in form, but it is also an indicator that HMRC is paying closer attention to your profile.
2. Share it with your adviser – and challenge constructively
   Ask how your current filing positions would stack up against the GfC13 expectations and the recent ICAEW commentary.
3. Identify where legal interpretation really matters
   Not every line on your tax return is contentious. Focus on:
   • residence and domicile positions;
   • source and character of income;
   • availability of reliefs and exemptions;
   • use of treaties, hybrd entities, and cross-border structures.

1. Decide how to handle unresolved uncertainty
   Options can include:
   • taking a more conservative filing position;
   • making disclosure of the uncertainty in the return; or
   • in some cases, seeking non-statutory clearance or otherwise engaging with HMRC in advance.
   • This is not a box-ticking exercise – it requires judgement, and that judgement should be properly recorded.

1. Review past returns where necessary
   HMRC and ICAEW have both stressed that where taxpayers discover errors, they should correct all affected years, not just the year HMRC has focused on in a particular campaign.
   Where amendment windows have closed, this may require formal disclosures rather than simple amendments.

8. How Vectigalis Tax can help

At Vectigalis Tax, most of the work we do with private clients, entrepreneurs and senior executives sits exactly in this complex but legitimate and legal space:

• multiple jurisdictions,
• significant amounts at stake,
• high expectations around governance and documentation.

A typical GfC13-aligned engagement for a client like James might look like this:

• Risk triage
  Rapid review of your structure and recent returns to identify where legal interpretation and factual complexity are most acute.
• Technical deep-dive
  Focused analysis of specific issues (residence, treaty claims, non-dom/FIG regimes, corporate residence, trusts, hybrids, crypto, etc.), benchmarked against legislation, case law and HMRC published practice.
• “Filing rationale” packs
  Concise internal notes setting out:
  • the facts we are relying on;
  • the legal analysis and probability view;
  • why the adopted position is, on balance, the most likely correct.
• Strategy on disclosure and HMRC engagement
  Advice on whether to:
  • disclose uncertainties in the return;
  • adjust future filing positions;
  • make voluntary disclosures for past years; or
  • seek clearances where appropriate.
• Ongoing governance
  Building simple internal protocols so that future decisions on tax-sensitive transactions are made deliberately, documented properly, and not left to chance.

9. Final thought

HMRC’s message with GfC13 and the recent letters is not subtle:

If you want the benefit of a sophisticated tax position, you must accept the responsibility of having a robust factual and legal basis for it

For many wealthy and internationally mobile taxpayers, this is less about changing philosophy and more about closing the gap between what they think has been done and what can actually be demonstrated to HMRC – or to a tribunal – if ever required.

If you’ve received one of these letters, or if you simply want to be confident that your returns are genuinely “correct and complete” in the sense HMRC now expects, we can help you assess and, where necessary, strengthen your position.

You can contact us via www.vectigalistax.co.uk or at angelo@vectigalistax.co.uk to discuss your situation in confidence.

Source: https://www.gov.uk/government/publications/help-ensuring-documents-filed-with-hmrc-are-correct-and-complete-gfc13