Confusion and alarm from HMRC’s nudgesby
HMRC has been sending generic letters to nudge taxpayers into reviewing their last tax return, but the agent’s copy of the letter doesn’t always specify which taxpayer it relates to.
HMRC uses data from many different sources to cross check information reported on self-assessment tax returns. It could open an enquiry every time a mis-match is found, but this is expensive in terms of person-hours, and the time taken to collect any additional tax.
As an alternative HMRC is experimenting with sending a standard letter to the taxpayer where the computer finds that the third-party information doesn’t match the tax return. The letter doesn’t state exactly what is missing from the return, but it is supposedly designed to nudge the taxpayer to review and correct the return where necessary. HMRC call these “one to many” letters.
This approach is light on HMRC manpower as the nudge letter is generated automatically by HMRC’s Connect computer system. The onus is placed on the taxpayer and their tax agent to investigate the issue and take any action required.
Unfortunately, where the HMRC letter is copied to the tax agents it doesn’t always state which taxpayer the letter refers to.
AccountingWEB member PaulinLeeds had just such a missive from HMRC in November 2020. It asked him to check his client’s pay and benefits in kind, as the figures on an earlier tax return don’t agree with the employer’s RTI return. The letter contained no client reference or name, and failed to include any HMRC contact details such as an address or telephone number to respond to.
Other AccountingWEB members have reported receiving similar generic letters from HMRC, some of which do include an HMRC email address to reply to.
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