Over the last twelve months we have seen HMRC issue ‘nudge’ letters to clients focusing on suspected undisclosed offshore assets.  These have been raised from information identified by the Connect system used by HMRC. 

It allows for a more targeted approach but has caused confusion because the letters offer no evidence of wrongdoing.  The intention is to ensure those targeted, consider and review their Tax Returns, to ensure they are reporting all sources of taxable income and gains.

The next two campaigns are now being issued with nudge letters for unreported disposals of taxable residential property and taxable employment benefits which don’t agree to amounts reported by employers.

The Connect system has access to a wide range of data, including land registry transactions and it will be able to link this to client records and home addresses.  It would report any anomalies to enable HMRC to target their approach.

Similarly, the Connect system can scan P11d submissions by employers to match against employees’ tax return submissions and look for disparities.

If you receive such a nudge letter and are unsure what to do, please speak to our Tax Team who will be able to give guidance on making any relevant reports to HMRC.

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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