Current HMRC Targets

HMRC Nudge Letters illustration 23rd July 2023

The HMRC Nudge Unit, previously called the Behavioural Insights Team, was a team within the Cabinet Office that was tasked with improving government services and saving money by employing a blend of behavioural economics and psychology.  An example of this in practice is the so-called “nudge” letters HMRC issue on the back of using their vast data collection resources. The HMRC ‘Connect’ AI computer system sends these nudge letters to large groups of targeted taxpayers, placing the onus on the taxpayer, not HMRC, to review historic tax returns and correct if appropriate.

Recent HMRC ‘Nudge’ campaigns – and the assumed originating data source (in brackets):
  • Aug-20: Business who are believed to have incorrectly claimed Coronavirus Job Retention Scheme subsidies (Challenged by HMRC when they believe the relevant staff were actually still working).
  • Oct-20: Individuals resident in the UK who had not declared the interest arising on bank accounts held in Indian banks (per data exchanged between UK & Indian tax authorities)
  • Jan-22: Individuals who have not declared cryptocurrency gains on their tax returns (based on what digital platforms now report to HMRC).
  • Aug-22: Incorrectly declared benefits in kinds (based on comparing disclosures on P11d’s with self-assessment tax returns)
  • Nov-22: Persons of significant control who have declared income of below £100,000 or who have not submitted a tax return (based on Companies House PSC registers).
  • Jan-23: Offshore corporates that own UK property (per Companies House register of overseas entities)
  • Feb-23: Incorrect R&D tax relief claims (perhaps targeted on the large number of amended tax returns submitted by unscrupulous R&D tax agencies)
  • Mar-23: Black economy landlords (per property owners on online booking platforms like Vrbo and Airbnb)
  • Apr-23: Individuals who have undeclared businesses through online platforms (based on sales records obtained from eBay, Etsy and Facebook)
  • Jun-23: UK residents with undeclared offshore assets (per those named in Pandora Papers 2021 documents leak).
  • Jun-23: Individuals claiming business asset rollover relief on what appears to be residential property (possibly based on Land Registry information)
  • Sep-23:  No add back of mortgage interest in rental income computations relating to residential property (probably based on comparing to total interest tax relief cl;aimed elsewhere on tax return)
  • Sep-23: Potentially spurious R&D claims made by care homes (based on sector classification).
  • Oct-23: Discrepancies in 2021-22 self assessment tax returns re entitlement to retain child benefit (based on comparison of tax return high income child benefit entries with child benefits data sources, if income exceeds £50k).
  • Oct-23: Discrepancies in 2021-22 self assessment tax returns re full declaration of benefits in kind (based on comparison with P11d submissions by employers).
  • Nov-23: Property owners who have incorporated their business in the tax year 2017/18 but reported no capital gains tax liability on their self-assessment tax return, on the basis that incorporation relief is believed to apply (Based on tax return relief claim).
  • Nov-23: UK taxpayers who have used a money service business during 2022/23 to send money abroad or cash cheques, and possibly not declared all income sources on their tax return (Based on money service business data reports).
  • Nov-23: Large businesses (individually or part of a group with turnover over £200m) that do not publish their tax strategy on their website (Based presumably on HMRC manually checking up on company websites).
Common arrangements for tax avoidance that HMRC believe do not work – as highlighted in their ‘Spotlight’ publication:
  • Sep-20: Spotlight 56 – Remuneration structured as a loan to a trust.
  • Jun-23: Spotlight 62 – A class of company shares issued to a minor, with substantial dividends on this class paid, to fund school fees.
  • Oct-23: Spotlight 63 – Hybrid property ownership partnerships, owning property via an LLP with a corporate partner.

If you have received a nudge letter, inaction can be perilous. Failing to respond promptly will undoubtedly lead to follow up questions by HMRC and may also lead to harsher penalties in the long-term, if a disclosure should be made, it is not made and more tax is payable as a result.


HMRC continue to go on record, stating its plans to continue to increase the use of AI to target tax evaders and non-compliant taxpayers. So nudge letters are probably now here to stay.



If you need more information please contact your local Whitings LLP office.


Disclaimer - All information in this post was correct at time of writing.
Other Blogs
Bethany Scott
8th December 2023 Christmas & New Year Opening Hours: Whitings LLP

We’re all feeling festive here at Whitings LLP, so what better time to share our Christmas & New Year opening times than now?   Bury St. Edmunds Closed from 5.30pm on Friday 22nd December 2023 Re-opens at 9am on Tuesday 2nd January 2024.   Mildenhall Closed from 5.30pm on Friday 22nd December 2023 Re-opens at…

Nick Edgley
7th December 2023 Selling On Digital Platforms: Don’t Get Caught Out

From January 2024 digital platforms like eBay, Vinted, Etsy and Airbnb will have to collect seller data and send onto HMRC.   Do you sell items on these digital platforms? If you are one of the many who sell on digital platforms such as eBay, Vinted, Airbnb and Etsy then be warned that from 1…

Amanda Newman
5th December 2023 Sole Trader V Limited Company

‘Sole Trader V Limited Company – Which is better for me?’   Minimising the tax paid on profits is a key aim of most SME businesses. The tax benefits of trading through a limited company, as compared to operating as a sole trader or partnership, were attractive as profits grow.   However with the increase…

Steven Denton
4th December 2023 Minimum Wage up 10% in April 2024: Cost to employers

Let’s discuss the cost to employers of the minimum wage rise April 2024.   During the last Tory Party conference, Prime Minister Rishi Sunak pledged that April 2024 would see the minimum wage increase to at least £11.00 per hour. The actual figure, announced on November 21st, is higher than expected, rising to £11.44 per…

Richard Alecock
1st December 2023 30 December: Self Assessment Deadline!

Don’t forget the 30 December Self Assessment Deadline!   If you want HMRC to automatically collect tax you owe from your wages and pension you need to submit your tax return online by 30 December and if so you are able to pay your Self Assessment bill through your PAYE tax code as long as all these apply:  …

Rob Dedman
30th November 2023 Autumn Statement: The Follow Up

Autumn Statement: The Follow Up   The Chancellor used his 2023 Autumn Statement to ‘go for growth’.  He has used increased tax receipts from better-than-expected economic performance to fund a headline-grabbing 110 growth-promoting measures.  Highlights include making permanent the ‘full expensing’ capital allowance, R&D tax credit reforms and business rates support for small businesses.  …