So-called “nudge letters” are letters sent by HMRC based upon particular information obtained by HMRC that might point to undisclosed UK tax liabilities.

The letters are computer generated based on data analysis performed by HMRC’s CONNECT computer system.  The letters typically refer to a particular concern identified by HMRC – such as offshore income and gains, let property income, domicile status or the disposal of cryptocurrencies – and invite the recipient to either sign a statement confirming that they are fully UK tax compliant or to enter a disclosure process to notify HMRC of any omissions to their tax returns.

The data is often crude, and the suspected risks are often unfounded.  However, no nudge letter should be ignored as this can prompt a full enquiry and a more punitive approach by HMRC.  In some circumstances an ignored nudge letter could lead to HMRC beginning a civil investigation of serious fraud (“COP 9”) investigation or a criminal investigation.

We advise on how to respond to nudge letters, we prepare any voluntary disclosures that might be required, and we negotiate with HMRC to minimise any tax, late payment interest and penalties payable.