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HMRC Nudge letters – what are they, and what to do if you receive one


In recent years HMRC has increased its use of sending unsolicited or ‘nudge’ letters to taxpayers to try and encourage tax compliance. You may not know what a nudge letter is, but if you receive one, you will need to know how to recognise it, what areas it targets and the action that you need to take. What is a ‘nudge’ letter? This is a letter targeted at specified groups of taxpayers where HMRC suspects their tax affairs may not be in order. They will often target specific trades or areas of tax where people tend to be less compliant. They are also referred to as ‘one to many’ letters. The letters encourage taxpayers to make a disclosure of any tax irregularities. What areas has HMRC recently targeted? The most recent nudge letter issued by HMRC has been in relation to individuals who are persons of significant control (PSC). These are people who own more than 25% shares in a company. The letters are directed at people who have declared income of less than £100,000 or are not currently submitting self-assessment returns. The following areas have also recently been the subject of nudge letters:

  • Customers of Euro Pacific Bank

  • Furlough fraud (Coronavirus Job Retention Scheme)

  • Research and Development

  • Cryptocurrency

  • P11D benefits

  • Offshore corporates owning UK property

What should you do if you receive a nudge letter? If you have received a letter and are confident that you have declared everything in relation to your obligations, then you don’t need to take any action. However, if you are unsure or know that you haven’t declared all your income to HMRC, then you need to seek professional advice. Contact rradar’s own tax expert, Steve Tetley, on 01482 296923 or at Steve.Tetley@rradar.com.

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