HMRC has been sending generic letters to ‘nudge’ taxpayers into checking their last tax return, but are causing more confusion than anything else!
The HMRC letters are sent to the taxpayer unless they have been told that an agent has been appointed, when they are sent to the accountant.
The primary problem is that the letters don’t state the taxpayer’s name!
Accountants therefore cannot tell to which client the letter relates.
The other piece of information that would be huge helpful for the taxpayer or the accountant, is the justification for sending the letter. What does HMRC think might be missing?
Why create so much confusion?
HMRC uses data from many sources to cross check information that they receive on tax returns. When they find a discrepancy, they could open an enquiry to query the mis-match. This would take man-hours that HMRC simply doesn’t have, and would be a very lengthy process.
Instead, they are sending these ‘one to many’ letters that are all from the same template.
They are generated when third-party information doesn’t match the data on a tax return. They don’t state what piece of information triggered the mis-match, but are designed to ‘nudge’ the tax payer to revive and correct the return where necessary.
This approach is obviously much quicker for HMRC, putting the time and admin burden on the tax payer and their accountant.
For clarity, we have no problem with reviewing tax returns if something is overlooked as they should be complete and correct at all times.
Unfortunately, as mentioned above, these letters are sent to accountants but don’t include the tax payer’s name or details, or contact details of the HMRC office involved, so advisors have no way of knowing which return they should review.
In our last business, we had a personal tax client list of more than 500 clients and weren’t a particularly large firm, so this omission is ridiculous!
It renders the whole process as pointless: the agent can’t address the issue; HMRC think the request for a review has been ignored and a taxpayer may face penalties if HMRC decide to pursue the matter.
It’s an experiment…
The ‘one to many’ approach is an experiment by HMRC. An officer is instructed to choose a population to target and compare the behaviour of the recipients of the letter with those of a control group. They will then review a range of outcomes to see if it is a worthwhile exercise.
What to do if YOU receive a ‘one to many’ letter…
If you are a Personal Tax client of ours, and receive any letter from HMRC that relates to your Personal Tax return, please send us a copy straightaway. We will be able to discuss the contents of your return with you, contact HMRC on your behalf and deal with the apparent mis-match.
Just as a reminder, you will automatically be covered by our Fee Protection scheme, which will pay our costs in dealing with any enquiry of questions from HMRC for returns that we submit. There are no unexpected fees to worry about.
If WE receive a ‘one to many’ letter…
This is where it will get complicated!
With so many Personal Tax clients (though thankfully far less than before!) we will struggle to identify to whom the letter relates.
Hopefully HMRC will take on board the criticism from our industry, and start to solve the identity problem before any hit our desks…
Worried about this or any other HMRC communications? Please get in touch – we’re here to help!