HMRC Targets Self-Employed
- Brian Pusser
- Jan 22
- 3 min read
The Quiet Expense Mistake That’s Putting Sole Traders on the Radar
HMRC has launched a new campaign, and if you’re a sole trader or in a partnership, this one matters more than most. Because it’s not aimed at offshore schemes, clever loopholes, or aggressive tax planning. It’s aimed at something far more common.
Expenses.
Specifically, whether expenses claimed in your tax return have been properly adjusted for private use.
And HMRC already knows where to look.
Why HMRC Loves “Campaigns” (And Why You Should Care)
HMRC doesn’t investigate randomly.
It runs targeted campaigns — focused attacks on:
Certain industries (landlords, contractors, trades)
Certain mistakes that keep appearing in tax returns
This latest campaign follows a successful trial in 2024.
The focus?
Unincorporated businesses claiming expenses where part of the cost is personal.
In other words: Costs that look business-related… but aren’t fully business.
The Private Use Problem
HMRC will zero in on expenses where it expects to see an entry in the “disallowable expenses” column.
The usual suspects:
Cars
Mobile phones
Mixed-use costs
Let’s make this real.
A Simple Example (And Where People Slip Up)
Gerry is a sole trader.
In 2025, his accounts show £12,300 of motor expenses.£2,200 of that relates to his own car — fuel, insurance, servicing, repairs.
Gerry keeps a mileage log (good move).
Total miles: 14,000
Business miles: 8,000
Private miles: 6,000
The private-use adjustment isn’t a guess.
It’s maths.
£2,200 ÷ 14,000 × 6,000 = £943
That £943 should appear as disallowable expenses in his tax return.
Miss that? You’re on HMRC’s radar.
The Trap HMRC Is Counting On
Cars and phones get most of the attention.
But HMRC doesn’t stop there once it opens an enquiry.
It also looks for:
Business entertainment (no tax relief allowed)
Costs hidden inside “advertising”, “marketing”, or “travel”
Expenses that feel business-related but aren’t allowable
These often slip through — until HMRC starts asking questions.
How to Protect Yourself from an HMRC Enquiry
Here’s how smart business owners reduce the risk before HMRC comes knocking.
1. Know What HMRC Looks For
HMRC publishes guidance on private expenditure in business accounts.
Read it. Use it. Fix any past mistakes if needed. Ignorance doesn’t protect you — records do.
2. Recalculate Private Use Every Year
Don’t assume last year’s split still applies.
Especially for:
Cars
Phones
Home working costs
Mileage changes. Usage changes. Life changes.
For motor expenses, keep:
Total mileage
Business mileage
A clear method
Then report the adjustment accurately.
3. Don’t “Bury” Adjustments Quietly
Some people adjust the figures before entering them on the tax return.
That’s allowed — but risky. If you do it, explain clearly in the additional information box.
In practice?
You’re usually less likely to trigger questions if you:
Enter the full expense
Show the disallowable amount separately
Transparency beats cleverness every time.
4. Use Reasonable Estimates (HMRC Allows Them)
HMRC accepts estimates when precise calculations aren’t practical.
Common examples:
Mobile phone use
Working from home costs
The key word is reasonable. And for home working? You can reduce disputes by using HMRC’s simplified expenses. Simple. Defensible. Harder to challenge.
The Real Risk Isn’t the Adjustment
Most people worry about “getting it wrong”.
But HMRC isn’t hunting honest mistakes.
It’s hunting:
No adjustment
No records
No explanation
That’s what turns a small error into a stressful enquiry.
And once HMRC starts asking questions… it rarely stops at one expense line.
The Takeaway
This campaign isn’t about clever tax planning.
It’s about discipline.
Clear records
Honest adjustments
Reasonable methods
Proper disclosure
Do that — and HMRC usually moves on to easier targets. Ignore it — and a perfectly ordinary tax return can suddenly become very uncomfortable. If you want help checking your expense claims before HMRC does, that’s a far cheaper conversation to have.
