6 October 2015: It has recently been reported in the accountancy press that HM Revenue & Customs ("HMRC") is making increasing use of so called 'nudge' letters in ongoing disputes in an attempt to extract early payment from taxpayers. The letters are reportedly being sent directly to taxpayers to circumvent the usual dispute resolution process. Normally, correspondence would be sent to any lawyer or accountant appointed by the taxpayer to represent them in the dispute.
These nudge letters could place undue pressure on a taxpayer which might result in them withdrawing from the process and settling their dispute. Had they been in the right to open the dispute in the first place, this may mean that they have paid an amount to HMRC which they did not owe. The disputes often relate to complex tax issues and the taxpayer may not have the technical knowledge themselves to deal directly with HMRC, hence the retention of a lawyer or accountant to advise the taxpayer and act on their behalf.
HMRC has cited the example of tax avoidance schemes and claims that taxpayers would not sometimes have been fully informed regarding the risks inherent in those arrangements and that it can be productive to write directly to the taxpayer to ensure that they are aware of all the options open to them.
Clearly, there is the potential for these nudge letters to have an impact on a taxpayer's (whether an individual or a company) financial position and, should the taxpayer make a settlement payment which they cannot afford, this may impact on their solvency. If you, a client or someone you know has received one of these nudge letters and would like confidential and impartial advice on the options available, please do not hesitate to get in touch with any of the BRI management team. All of their details can be found by clicking on 'The Team' above.