HMRC compliance: more data, more questions

HMRC’s ability to gather and analyse data is extensive, and with every piece of information it acquires, its ability to target compliance activity increases.

Input comes from many different sources, national and international - from regulated commercial bodies, like online sales platforms; to government organisations, like the Land Registry. Proposals recently tabled would extend data collection powers to cover provision of information on dividends paid to shareholders in owner-managed businesses; hours worked by employees; and the business sector in which self-employed people operate.

Access to all this data gives HMRC a sharper, more comprehensive picture of taxpayer affairs than ever before. And it can use it to ask questions about taxpayer and business affairs. Increasingly, this is being done by campaigns involving what are called one-to-many nudge letters, often used where HMRC believes there are issues of potential non-compliance across a particular business sector or income source. There is usually a specific trigger for this, such as apparent mismatch between third-party data received by HMRC, and data it holds on tax returns submitted. From HMRC’s perspective, it’s cost effective and shifts workload to the taxpayer.

Recent examples include nudge letters sent to taxi drivers working for online platforms like Uber and Lyft, and landlords who have put a deposit in a tenancy deposit scheme. In each of these cases, it is likely that the trigger has been HMRC receipt of third-party data.

At the close of 2022, HMRC was writing to individuals registered as Persons of Significant Control (PSCs), where records from Companies House suggest that they stopped being a PSC in 2021/22. The letter is intended to serve as a reminder that if they are no longer a PSC because of a disposal of shares, this should be declared in the tax return. It also recaps responsibilities around capital gains tax reporting, and reminds of the potential need for amendment of returns if such disposals were not included.

What to do

HMRC nudge letters do not mean a formal compliance check, neither do they necessarily mean there is an error in someone’s affairs: any error could be HMRC’s. They should, however, always be taken seriously, with a timely response or review of the figures. As your agents, we may get a copy of such letters, but this is not always the case. Do please contact us if you receive a nudge from HMRC.

Home | Contact us | Site map | Accessibility | Help | Disclaimer |

© 2024 Poole Resources Ltd. All rights reserved. Poole Resources is a trading name of Poole Resources Limited. Registered in England & Wales No: 06138681. Registered office as below. A list of directors is available upon request.


Poole Resources Ltd, 95 High Street, Street, Somerset BA16 0EZ
We use cookies on this website, you can find more information about cookies here. powered by totalSOLUTION
ACCA logo