Hundreds of high earners in the UK have been targeted by a new batch of HM Revenue & Customs (HMRC) nudge letters, requesting them to voluntarily call the tax authority ahead of their 2021/22 self-assessment tax return submission.

Who is affected?

This latest nudge letter campaign, one of several currently in operation by HMRC, is being sent to anyone with income over £200,000 or who has assets over £2 million. It asks them to contact the tax inspectorate’s wealth unit for an informal ‘chat’.

Why are the letters being sent?

HMRC has said that an informal pre-filing conversation with these taxpayers could help prevent errors.

They will do this by ensuring any unusual transactions can be discussed, and the implications laid clear so that the correct amount of income is reported and the right amount of tax is paid.

Should you speak with HMRC?

The call with the tax authority is entirely voluntary and you are not compelled to provide them with any information over the phone.

Several tax experts, including our tax team, have highlighted that an unrepresented call with HMRC, without the support of an experienced tax adviser, could create unnecessary risks.

HMRC is likely to want to dig deeper into your income and expenditure for the last year and if you aren’t equipped with the full knowledge or information, you may unwittingly or unintentionally provide information to the tax authority that could lead to more formal investigation procedures.

HMRC has clearly stated that this voluntary call does not guarantee that it will not enquire into the tax return after it’s subsequently filed.

Similar advice has also been given by several tax and accountancy bodies, who also say that this new tactic from HMRC should be approached with caution, even if it is well-intentioned.

What to do if you receive a nudge letter?

First and foremost, you should make contact with our tax team before you take any other steps. We can help you understand your obligations and provide advice on whether you should contact HMRC.

We can also go over your current affairs and explain the information that needs to be shared with HMRC each year, so you don’t expose yourself to unnecessary risk. Speak to our team if you are contacted by HMRC.