Carousel_Arrow Chat icon_cookie IHT_trust_wills IR35 Combined Shape 2 Group 10 Login Mobile Menu Share Share Email SubMenuMobile Group 9 VAT View_Gallery View_List capital_allow Triangle 2 Copy Close construction cyberpro employment_tax_shares emplyer_solutions entrepreneurs_corps fee_protect Group 7 grant_fund Group i_Clock i_Consult i_Done i_Eligibility_Tick i_Enter i_Filter i_HMRC i_Negative i_Play i_Plus i_Reset i_Support_Legal i_Support_TaxDesk i_Support_VAT i_Tick noun_marketing_1872083 noun_online_2126759 i_download i_meet Group Copy 24 Group 18 noun_electrical_1240755 copy noun_Technology_2125422 noun_Science_2031115 i_tick_bullet_block international_tax patent_box private_client property_sdlt r_and_d reliefs_incentives Search specialist_tax status tax_indemnity valuation YouTube
Markel Tax

11 Feb 2022

HMRC ‘nudge letters’: why you should take a proactive approach

HMRC continues to issue ‘nudge letters’ to encourage individuals to check their tax affairs are up to date, but receiving one does not necessarily mean there’s a problem.

‘One to many’ letters are a more cost-effective way for HMRC to follow up on the vast amount of data it holds, compared to opening a compliance check into the returns of every individual who receives one. They are not based on any statutory power available to HMRC, and instead typically rely on the taxpayer taking action themselves, an approach informed by behavioural science.

Recent recipients of nudge letters have included:

  • People who may have received partnership income, or offshore income or gains

  • People who may have disposed of residential property or cryptoassets

  • People who have told HMRC that they are domiciled outside the UK

  • People who have made a claim for foreign tax credit relief

  • Persons of Significant Control (PSCs) who may have disposed of shares

  • Claimants of CJRS (furlough) and SEISS (self-employed income support) payments during the pandemic

The prudent approach

There are various reasons why HMRC may have issued a nudge letter, so there’s no need to panic if your client receives one – it does not necessarily mean there’s an issue.

You should, however, take the opportunity to review your client’s tax affairs fully. If you find them to be in order, no further action is needed, but it is prudent to respond to the letter making it clear to HMRC that you’ve reviewed the situation and found no issues.

If you do become aware of any issues, there are various ways to reach a resolution, including amending the relevant tax return, or making a disclosure to HMRC using one of the services available. This proactive approach is much more likely to result in lower or no penalties than waiting for a more formal approach from HMRC.

Markel Tax has extensive experience of HMRC’s range of compliance activity. 

For more information on how we can help, call us on 0333 305 3667 or email Taxinvestigationsuk@markel.com.

Tagged HMRC Tax Investigations
Next article in series

11 Feb 2022

Why fee protection insurance is a win for you and your clients