HMRC sends ‘nudge letters' following first international exchange of information

24 May 2019

HMRC has begun to issue ‘nudge letters’ based on the Common Reporting Standard (CRS) international information exchange.

In conjunction with the G20, the OECD developed the CRS as a global standard for the automatic exchange of information. Nearly 60 jurisdictions began to exchange data in September 2017, with many more beginning participation in 2018. As a result of this increased exchange of information, it is clear that HMRC have begun to act on the information received.

View our interactive map to see which jurisdictions are participating and when they signed up to the CRS.

We have received a copy of a redacted letter that many individuals are now receiving as a result of the first exchange of information between the UK and other countries.

If an individual receives this letter, it does not necessarily mean that their UK tax position is wrong. We expect this to be one of many batches of letters that will be issued based on the CRS international information exchange.

This is not just a “nudge” letter, but instead is asking taxpayers to complete a ‘certificate of tax position’. Only two choices for completing the certificate are available:

  1. They make a statement that they are registering to make a disclosure; or
  2. State than no amendments are needed.

Completion of these certificates is not mandatory, however it is likely that HMRC will open an investigation if no response is received (given the issue of the letters suggests that HMRC have obtained data from overseas  which has discrepancies with an individual’s UK tax return, or lack thereof).

It is not advisable to respond to the request for information without first seeking advice from a tax adviser.

We are encouraging taxpayers who receive these letters to review their tax affairs, and approach HMRC if a disclosure needs to be made – HMRC have various disclosure facilities available depending on the fact pattern. It is likely that any individuals with a disclosure to make will fall into the Failure to Correct regime (where minimum penalties of 100% can be imposed, unless the taxpayer has a reasonable excuse for failing to correct their position within the Requirement to Correct deadline).

Read more about the Requirement to Correct.