HMRC has been sending out ‘nudge’ letters to people who are required to file a tax return by the end of the month
Many people who may have overlooked a letter from HM Revenue and Customs (HMRC) could soon face fines of up to £900. With the self-assessment tax deadline of January 31 looming next Friday, HMRC has sent out “nudge” letters as a reminder to get those tax returns in and settle any owed taxes.
For those who are unsure over whether they’re due to pay any tax to HMRC, the letters aim to remind people to file on time. The Chartered Institute of Taxation (CIOT) warns tax advisers that the certificates from HMRC are often unnecessary, while accountancy firm BDO advises: “If you have received a nudge letter from HMRC, the best thing you can do is contact a tax disputes professional.”
Its experts added: “You may have been offered a disclosure process in the letter from HMRC already, but it is important to understand the process and the other disclosure options you can use to get your affairs up to date. There may be more suitable options for your situation, particularly if the matter relates to offshore accounts”, as reported by Birmingham Live.
Taxpayers should not ignore a nudge letter, as there can be huge financial repercussions. HMRC isn’t always accusing the recipient of submitting an incorrect tax return.
Instead, a risk assessment is conducted by the government department before sending the letter, which it says involves comparing information it has received with submitted tax returns. The letter typically suggests that there might be a reasonable explanation for any discrepancy they’ve identified when cross-checking information received from overseas tax authorities. Financial penalties are usually imposed in cases of tax return disputes.
An initial penalty of £100 applies regardless of whether any tax is due or if the tax owed is paid promptly. After three months, households are warned about additional daily penalties of £10 per day, up to a maximum of £900.
More information on tax return penalties and how to calculate any penalties you may owe can be found on GOV. UK here.
