What you need to do if you receive a HMRC 'nudge letters' in the post

There are days left before the important deadline
-Credit:Reach Publishing Services Limited


Some people could see a 'nudge letter' from HMRC landing on their doorstep this month. With HMRC's self-assessment tax deadline approaching on January 31, it is important that you pay attention if you receive an unexpected letter.

Everyone who has earned certain untaxed income must submit a tax return before midnight on January 31. But some people are not aware that they are even liable for extra tax.

Side hustles like cryptocurrency or selling your unwanted stuff on Vinted could make you liable if you earn over a certain amount. To make sure that people who owe tax are aware of the deadline, HMRC sends what are known as 'nudge lettr'.

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The letters urge people to submit tax returns and pay their dues, Express reports. According to BDO, there are three types of nudge letters you could receive.

Educational nudge letters are designed to draw the recipient's attention to something HMRC thinks they may have missed or prompting them to seek tax advice. Future or current tax returns could be changed if the deadline to amend the issue has not passed.

Letters based on information from HMRC are similar to educational letters but may specifically highlight past tax or account mistakes. Taxpayers who receive these letters are encouraged to double check their returns, think about possibly seeking professional advice, and fixing whatever may need changing.

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This letter will require a response either by submitting an amended return, if there is enough time before the deadline, or making a formal disclosure to HMRC. A disclosure process may be suggested but there are several ways to do this depending on your circumstances.

The most serious nudge letters come with a Certificate of Tax Position. This asks the recipient to tick which of four scenarios applies to them and return the certificate to HMRC.

According to BDO, the Chartered Institute of Taxation guidance warns tax advisers that these certificates should not be completed in most cases. Any type of nudge letter does not signal the start of an investigation by HMRC but your response could potentially spark one.

If you miss the January 31 deadline, you could initially be fined £100. Interest could also be charged on any late tax dues and if three months goes by without payment, more fines can be piled onto the bill.