One-to-many ‘nudge’ letters and data accessible to HMRC

In the past few months HMRC have been issuing an increased number of ‘One to Many’ nudge letters to individuals who they feel should be completing a self-assessment tax return or have filed an incomplete self-assessment tax return. A “One to Many” letter is HMRC’s way of sending one nudge letter to many clients allowing HMRC to reach many taxpayers about specific issues, where HMRC’s data show that there may be an area of non-compliance.

During November 2022 HMRC are sending “One to Many” letters to taxpayers who have submitted deposits into the Tenancy deposit scheme but, according to HMRC, have under-declared their rental income in their 2020/21 tax returns. Other recent “One to Many” letters have included; Persons with significant control, anyone who can exert significant influence or control over a company, who are not submitting self-assessment tax returns, and Taxi Drivers who drive for an online platform such as Uber or Lyft.

It is important to note that whilst these letters state they are not a formal compliance check they should not be ignored. The nudge letters are an invitation to consider if you have underdeclared taxable income previously or if a self-assessment return should have been filed.

Due to the nature of HMRC, the new regulatory powers they have been given and the recent growth of digital communications, HMRC have access to a vast amount of data from many sources, including but not limited to:

• Other government departments and agencies; DVLA, Land Registry, Border Agency, Companies House, Council tax records, electoral roles, overseas tax authorities and many others.

• All tax returns filed including income tax returns, VAT returns, corporation tax returns and PAYE submissions.

• Financial records held by banks and building societies, online payment providers, debit and credit card accounts, crypto asset platforms, credit reference agencies and insurance companies.

• Online sales websites such as Amazon and eBay as well as property websites like Rightmove and Zoopla.

• All social media accounts and posts.

As HMRC have access to so much data it is becoming more common that areas of non-compliance and underdeclared income are being highlighted. Since UK tax compliance puts responsibility on the taxpayer, it is down to the taxpayer to ensure that all their taxable income and gains are declared.

If you have received a ‘One to Many’ nudge letter, please ensure you contact your usual Whitings contact or local office.

Disclaimer - All information in this post was correct at time of writing.