HMRC is sending “nudge” letters to people who have significant control of a company. Why is this happening and what should you do if you receive such a letter?
So-called nudge letters are generally sent to individuals who HMRC thinks may not have fully declared their income, and are a kind of informal “prompt” to take action if needed. The latest campaign is targeting people who appear on the persons of significant control (PSC) register if either:
- less than £100,000 of income was declared on the 2020/21 tax return; or
- they are not submitting self-assessment tax returns.
Of course, it’s perfectly possible to be a PSC and have little to no income from the company to declare, e.g. shareholders of a company that isn’t trading or it’s making losses meaning no dividends are being paid out, so receipt of a letter doesn’t necessarily mean you’ve done anything wrong. Nonetheless, the number of letters is likely to be significant. So what should you do if you receive one? If you’ve not been completing self-assessment tax returns, you can check whether you need to here. If you are already within self-assessment but haven’t declared any taxable benefits received from the company, receipt of a share option or a disposal of shares, the letter should instruct you to amend your 2020/21 tax return. The deadline for doing so is 31 January 2023, but ideally you should pay any outstanding tax as soon as possible to avoid further late payment interest charges.