The department has, for several years now, used so called nudge letters as a tool to seek to increase tax compliance and ultimately tax collection. These are letters targeted at specific taxpayers based on a common characteristic and highlighting an area which HMRC consider contributes to the UK tax gap, i.e. the difference between the national level of tax that should be paid and that actually collected.
The letters tend to originate from data gathered by the tax collection body from a variety of sources including Common Reporting Standard (CRS) and use of Sch.36 notices as well as from things like Stamp Duty Land Tax returns, Land Registry filings, Employer and other taxpayer data, and open source data.
This autumn HMRC have announced a string of areas in which they are using nudge letters, including:
No doubt the list of target groups will continue to grow, as HMRC view the use of nudge letters as a low cost and low effort way of using data available to them in order to target their resources.
Recipients of a nudge letter will want to consider their options carefully. Whilst most carry no statutory obligation to do anything there is a risk to both making an unsubstantiated reply that all’s well without having checked the position carefully and to ignoring the letter and hoping to hear no more about it.
The next step
Should you receive a nudge letter from HMRC you can contact your local UHY office to get our expert advice on how best to deal with it.
