Most tax professionals are well aware of HMRC’s tactics to check the accuracy of taxpayers’ affairs via its 'one-to-many' mailings, often referred to as 'nudge letters'. HMRC favours this approach because it allows the department to contact vast numbers of taxpayers with relatively minimal effort.
We are aware of at least 16 recent nudge letter campaigns, as follows:
The items listed at 1 to 10 above have been / will be sent to taxpayers where HMRC has undertaken a risk assessment and identified a potential loss of tax. The items at 11 to 16 above aim to educate relevant taxpayers about complex areas of the tax system where mistakes are often made. Whilst a number of the letters are being copied to taxpayers’ agents, some of them are not, hence taxpayers should be encouraged to share the letters with their agents.
Upon receipt of a nudge letter, the burden shifts to the taxpayer to take action and review their historic affairs, which results in a variety of outcomes:
If HMRC issues a letter in instances where a loss of tax is suspected, inaction from the taxpayer will undoubtedly lead to follow up questions by HMRC. The educational letters do not necessarily require a response to be sent to HMRC; however, taxpayers are encouraged to review their affairs, because HMRC will come down harder on taxpayers who received fair warning that they ought to do so if tax is later found to be underpaid.
Our advice can be summarised as follows:
If a disclosure is needed, Crowe’s Tax Resolutions specialists have worked with numerous taxpayers / their agents to bring historic tax issues up to date. If you choose to work with us, you can expect that we will:
Since the beginning of 2019, our statistics show that, whilst it is not always possible to mitigate penalties altogether, we have helped our clients to reduce penalties across the board to a fraction of the average maximum penalty our clients initially faced as a percentage of the underpaid tax. We have also successfully argued reasonable excuse on numerous occasions, which has resulted in HMRC accepting that a 0% penalty is due in appropriate cases.
Our team is accessible and approachable, and ready to answer your questions, giving you the confidence you need when dealing with a sensitive issue such as an HMRC enquiry or other tax dispute.