HM Revenue & Customs (HMRC) use ‘nudge’ letters to remind taxpayers of their legal obligation to report their tax affairs accurately, and to pay any tax that they owe.

This ‘one to many’ approach is an efficient alternative to making formal inquiries into the affairs of every taxpayer HMRC suspects of having undeclared income.

The letters act as an unofficial warning to taxpayers and present them with an opportunity to iron things out so as to avoid further fines, formal investigations or more serious sanctions.

Common targets for HMRC nudge campaigns

Over the years, HMRC has targeted ‘groups’ that it associates with a certain tax risk. It is not uncommon, in our experience, for taxpayers with overseas income or gains, or residential landlords with rental income to be targeted.

Whilst not quite as common, we are also aware of HMRC sending nudge letters to:

  • Online sellers
  • Claimants of R&D tax relief
  • Those within scope of ATED
  • Offshore entities

Of course, this list is not exhaustive and there are many reasons why HMRC might issue a nudge letter. Furthermore, as HMRC gains access to more and more financial data all the time, the scope of its campaigns is likely to grow.

I’ve received a HMRC nudge letter – what should I do?

If you have received a nudge letter from HMRC, or you believe that the information HMRC holds in relation to your tax affairs may be incorrect, it is important to seek professional advice.

Normally, HMRC will give you 30 days to respond before any further action is taken, so it is essential that you don’t ignore the letter.

Our team of experienced tax advisers can help you to understand why you have received a letter, to respond to the communication where appropriate, to mitigate any penalties, and to navigate the disclosure or enquiry process should this be necessary.

We also offer a tax investigation insurance that covers most types of investigation. The insurance policy is in our own name and backed by Vantage Tax Fee Protection Limited, one of the UK’s leading providers.

Our policy enables us to provide you with expert advice and peace of mind that our fees for supporting you through an investigation will be covered.

If you have concerns about undeclared income or need support to ensure your tax affairs are always in order, contact us today.

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