How confident are you that your tax return software calculates the tax due correctly? In last week’s newsletter we explained why you may need to be sceptical. We also highlighted some underhand letters HMRC are sending to taxpayers. Finally there was a revised HMRC guidance note and a consultation document which you should read if you have any non-domiciled or non-resident clients.

This is an
extract from our topical tax tips newsletter from last week, dated – 8 October 2015. 
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Nudge letters 
HMRC has a “nudge” unit. Its policy is to persuade taxpayer to pay the right amount of tax. It does this through carefully worded letters containing psychology techniques to subconsciously nudge the recipients to declare previously undeclared profits. We have reported earlier missives from the HMRC nudge unit in our newsletters on 17 April 2014 and 3 July 2014. 
The latest targets of the nudge unit are taxpayers who are in dispute with HMRC. Some of those taxpayers have been receiving letters that encourage them to settle the dispute with HMRC. The letters play on the natural desire of taxpayers to avoid confrontation, particularly when up against a powerful opponent such as HMRC. 
If your client has received such a letter, but you may not be aware of it as HMRC are not sending copies of the letters to the registered tax agent. This is a serious issue, as those nudge letters could be construed as an attempt to apply improper pressure to settle the tax dispute – coming from the party that has the greater power. 
If you feel a line has been crossed by the nudge letter your client has received in connection to their tax dispute, a reasonable course of action would be to complain to HMRC. Out tax investigation experts can provide impartial advice on the issues underlying the tax dispute and the likelihood of winning the argument. 

As always, the
full newsletter contained links to related source material for this
story and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.