Nudging to correct the tax return

Dec 16, 2020

HMRC uses data from many sources such as banks, land registries, and Companies House to cross-check information reported on self assessment tax returns. If HMRC’s computer finds a mismatch between the third party data and your 2018-19 tax return you may receive a letter asking you to review your return.

That letter will not detail exactly what is missing from the return as it is a standard text automatically generated by the computer and sent to a large group of taxpayers. This approach saves HMRC time and puts the onus on you to investigate the issue and take any action required.

The HMRC letter does not constitute a formal opening of a tax investigation but 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.

If you receive one of these slightly alarming letters, please contact us.