We have been advised that HMRC is sending computer generated letters to taxpayers when the submitted 2019 personal tax return contains information that differs from the information held by HMRC.
HMRC uses data from many sources to cross check information reported on self- assessment tax returns. It could open an enquiry every time a mis-match is found, but this is expensive in terms of person-hours, and the time it takes to collect any additional tax. Instead, HMRC are sending these automatic letters as it reduces HMRC’s costs – by transferring those costs to the taxpayer and their accountant!
The letter doesn’t state exactly what is missing from the return. The idea is that the taxpayer has to review the information on the return and double check (again) that the return is correct.
These letters are being sent to taxpayers where HMRC thinks that there is a discrepancy in the areas of:
- Deemed domicile
- Statutory residence
- Discrepancies with employer reported pay and benefits
- Disposal of residential property which was not the main home
- Investment income from financial institutions
- Deferred consideration on sale of private company shares
- Income of persons with significant control of a company
If you receive one of these letters from HMRC it is important that you contact us as soon as possible so that we can advise the appropriate action to take.
HMRC has stated that it will send a copy of these letters to accountants, but its systems do sometimes fail on this.
Whilst these letters do not amount to a formal enquiry, it is important that they are not ignored.
We can advise on the balance between cooperating with HMRC whilst not providing information to which HMRC may not be entitled.
Please get in touch with your usual Robson Laidler contact to discuss or email our tax team: taxteam@robson-laidler.co.uk