HMRC is issuing ‘nudge letters’ to charities.

The ‘One to Many’ approach takes the form of correspondence commonly known as nudge letters. Nudge letters usually state that HMRC holds information on the taxpayer that the letter is addressed to, and are used to encourage taxpayers to review their tax affairs.

Nudge letters are a cost-effective solution for HMRC to communicate with a large number of taxpayers. Letters previously issued either relate to a potential loss of tax that HMRC has identified or, more broadly, are an educational exercise.

This latest nudge letter campaign is an educational letter, helping charities to get their Gift Aid claims on aggregated donations right, together with a reminder of their Gift Aid record-keeping requirements.

Disclosures and penalties

If you find a mistake in your filings to HMRC, disclosing the error or omission before HMRC sends a nudge letter or opens an enquiry will lead to the most favourable outcome. Following receipt of a nudge letter, a disclosure to HMRC will be treated as ‘prompted’ for penalty purposes. Prompted penalty rates are higher than those that apply to unprompted penalties. Completely voluntary disclosures to HMRC benefit from the lowest possible penalty range for the type of error, and the length of time interacting with HMRC will be significantly shorter, compared to a full investigation.

A professional tax advisor can guide you through the disclosure process and advise, where applicable, of the penalty mitigation available. We recommend taxpayers immediately seek professional advice if they have found a mistake in their filings to HMRC.

At haysmacintyre, we have a wealth of experience in making successful disclosures to HMRC. Should you have any queries regarding your Gift Aid claims, please do not hesitate to contact Louise Veragoo, Not for Profit Tax Director, or Danielle Ford, Partner and Head of Tax Disputes & Resolutions.