With resources stretched at HMRC at the best of times, but even more so currently, they are writing ‘nudge letters’ to taxpayers to encourage them to check their returns, but the copy that’s sent to tax advisors doesn’t necessarily tell us who they have written to.
HMRC’s systems cross-check information on an individual’s tax return to a variety of sources, and inconsistencies are flagged up.
It’s commendable that HMRC are giving taxpayers the opportunity to amend a return in such a ‘light touch’ manner, rather than opening a formal enquiry (which are normally more labour intensive).
However, what is less commendable is the lack of clarity about which part of their return the taxpayer should be checking, and even less helpfully, although HMRC send us a copy of the letter, the version we receive does not always specify who you are.
HMRC refer to such correspondence as ‘one to many’ letters, and whilst it doesn’t constitute a formal opening of a tax investigation, it does require action as HMRC may follow up if the tax return is not amended. We can help you check your return and reply to HMRC.
The issues HMRC is currently writing to taxpayers about include:
- discrepancies with employer reported pay and benefits;
- disposal of residential property which was not the taxpayer’s main home;
- disposal of property described as ‘other assets’;
- investment income from financial institutions;
- deferred consideration on sale of private company shares;
- income of directors who control their own companies;
- tax relief claimed under double taxation agreements; and
- foreign tax relief claimed against employment income.
Should you receive one of these letters, please send a copy to us.