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HMRC Nudge Letters

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Nudge letters are becoming an increasingly common tool in HMRC’s armour as they look to close the gap between the amount of tax collected and the amount of tax which they believe is not paid by individuals and businesses.

What is a nudge letter?

Nudge letters (or one to many letters) are an easy way for HMRC to communicate with lots of taxpayers in one go, thus meaning that they are not opening full enquiries on each taxpayer, which can be time consuming.

A nudge letter is a uniform style letter sent to a large number of taxpayers in one go, who have been identified, often through knowledge sharing with other platforms of being at risk of not having fully declared or paid tax.

In recent years, HMRC have issued nudge letters to a wide variety of individuals and businesses in relation to all sorts of tax issues including, but not limited to:

• Undeclared income or gains from overseas assets
• Undeclared capital gains on the sale of land and property
• Incorrect claims under the furloughing (CJRS) or SEISS schemes
• Making Tax Digital (MTD) for VAT
• Annual Tax on Enveloped Dwellings (ATED)
• Those with an interest in offshore entities following the offshore entity register
• Business Asset Disposal Relief (BADR) lifetime allowance
• Research and Development (R&D) tax relief
• Income from short term property letting
• Online traders
• Those creating content on digital platforms such as TikTok, Instagram and YouTube
• The capital allowances super-deduction

This list continues and as time goes on it is clear we will see new hot topics being covered as the information that HMRC receive from the public and private sectors increases.

Any individual or business who receives a nudge letter and believes they who need to make a disclosure should do so as soon as possible, but we would always advise getting professional advice before responding to any such letter. We can assist with this.

 

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Case Study

HMRC nudge letter

HMRC nudge letter

Intro

A client of ours had been approached by HMRC who sent a ‘nudge letter’ advising they believe that the client may have received foreign gains that should be taxable in the UK.

Issue

Our client was not in receipt of any foreign income or gains for the year in question and HMRC seemed to suggest otherwise.

How we solved it

We assisted our client with responding to HMRC by acting on their behalf during the entire process. We worked with the client to obtain all the relevant details and identify where HMRC had received the incorrect information from. Documentation in relation to an offshore life insurance policy our client held contained an error and we assisted our client with obtaining the correct details from the provider to prove to HMRC that there was in fact no gain chargeable.

The Outcome

Our expertise and assistance meant our client was confident that they were obtaining the necessary support and HMRC responses were handled correctly and professionally. Once we were able to obtain the correct documents, HMRC were in agreement that there was in fact no chargeable gain and revoked their enquiry.

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