What are the different types of nudge letter?
HMRC nudge letters can be viewed in different ways by the taxpayers receiving them:
- Are they educational? or
- Are they based on Intelligence and data held by HMRC, which may identify a need to make a disclosure to HMRC?
“Educational” nudge letters
These letters are not necessarily intended to suggest that the taxpayer may have made a mistake or ask them to take any action but are educational nudges, which highlight common tax errors and changes to legislation, of which the taxpayer may not be aware. That does not mean the taxpayer may not become anxious – it depends on your viewpoint!
“Intelligence or data-based” nudge letters
This type of nudge letter often cites more specific details (e.g. offshore assets and income or say an entry on the Persons of Significant Control register at Companies House) and invites the taxpayer to check their returns on this issue and notify HMRC if they think an error may have been made in submitted tax returns or accounts.
It is becoming clear that if a disclosure is made following such a nudge letter, it is likely to be treated as prompted, as that affects the issue of higher penalties, which HMRC will charge.
Sometimes such letters explicitly state that if HMRC does not receive a response, it will open a compliance check (enquiry) or take other actions to contact the taxpayer again.
There is no requirement to sign the certificate attached to some nudge letters, but it is important to seek professional guidance before making any decisions, which could have considerable financial impact on the taxpayer, and so what you do, how and when you do it, is very important.
For example, where no errors have been made, it could be as simple as emailing or calling the relevant HMRC team confirming there have been no errors in returns filed, but the wording you use will be critical even if you are sure, you have done nothing wrong.
Do I need to make a disclosure to HMRC?
Where no errors have been made, it could be as simple as emailing or calling the relevant HMRC team confirming there have been no errors in returns filed, but the wording you use will be critical, even if you are sure you have done nothing wrong.
However, where a disclosure is required, it is strongly advisable to seek specialist professional tax advice, with a firm such as Samuels LLP who have many years of experience in tax enquires and HMRC investigations, which in some cases can turn into criminal prosecutions.
We are here to help, and hand hold you through the minefield that can be created by such letters, especially if a taxpayers have been less than accurate in their tax return disclosures. Any discussions and clarifications are strictly confidential.
For more information, Book a Free Consultation with us.
