Latest HMRC nudge campaigns

HMRC continues its rather ‘scattergun’ approach to tax compliance checks. One arm of this approach is to issue a wide range of what they call One To Many or commonly known as “nudge “letters. These are sent to taxpayers where HMRC feel that, based on the information they hold, there may have been omissions within the tax returns filed.

What is an HMRC nudge letter?

A nudge letter is issued when HMRC holds third party information which indicates there has been an omission from the filed tax return. It may also suggest that a return should have been filed but has not.

The process is based on a simple data clashing exercise, between third party data HMRC receives and the entries made within a tax return. This third party data could be an account held with a financial institution abroad. If this clashing exercise flags up a mismatch or omission, then a nudge letter is issued to the taxpayer.

Does receiving an HMRC nudge letter mean you’ve made a mistake?

Although there is nothing random to being selected for such action, receipt of a nudge letter does not guarantee there has been an omission leading to underpaid tax. It is important to consider the content of the nudge letter and establish whether the filing position is correct.

Third party data can often be incomplete or misleading and HMRC rightly have to make some assumptions. While it is possible that a filing requirement has been missed, it is also possible that everything is in order. HMRC’s information at hand could be incorrect or relates to say accounts held in another capacity such as that of a trustee.

Recent HMRC nudge campaigns

Nudge letters form part of a ‘campaign’ where HMRC will issue letters to all taxpayers that satisfy certain parameters or conditions. Every year brings a fresh series of campaigns and this year has been no different. Below are some of the more recent nudge letter campaigns:

• Associated companies (August 2025) – directed at companies that HMRC have identified as having not declared associated companies in their corporation tax returns and thus having potentially claimed higher marginal rate relief than they are entitled to
• Annual tax on enveloped dwellings (ATED) (January 2025) – directed at companies who owned properties valued at above £500,000 but declared no taxable profits and filed no ATED returns between 2017 and 2020.
• Online marketplace sales (February 2025) – directed at taxpayers who have made sales via online marketplaces in the year ended April 2023, but did not file a tax return, or did not declare any self-employment income on their tax return
• Crypto assets (October 2024) – directed at taxpayers who, based on reports received from digital platforms, sold crypto assets but have not declared the profits or gains on their tax returns
• Wealthy individuals (September 2024) – directed at taxpayers earning over £200,000 a year who either have not registered for self-assessment or failed to submit a 2021/22 tax return despite a notice to file from HMRC.

Responding to an HMRC nudge letter

Nudge letters typically warn the recipient that taking no action will likely result in an enquiry. Effectively HMRC are saying ‘fess up now or we will start digging around’. HMRC usually give a deadline of 30 days to respond. You can respond either via a lodging an intention to disclose, or informing HMRC there is nothing to declare.

If you receive a nudge letter, you should:

• Check whether there is a potential omission or underpayment. Is the nudge letter right and do you need to make a disclosure? Is there a legitimate reason that whatever HMRC have identified does not actually need to be declared on your tax return?
• Check whether you can meet the stated deadline. Failure to act in time can result in assessments being issued or enquiries opened. Extensions can be arranged by calling the correct helpline or the officer directly.

If a disclosure is required, it is important that you only disclose those years which HMRC are legally entitled to. You should also ensure that the penalty loadings you advance are appropriate to the behaviour which gave rise to the underpayment.

If you are unsure over what you need to do or say to HMRC then best advice is to engage with tax dispute resolution experts.