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I think we are all getting used to the concept of HMRC’s nudge letters. I can see why from HMRC’s perspective they are an efficient use of resources. I’m not sure how targeted they are, and I know that some people regard them as little more than an exercise at throwing spaghetti against a wall and seeing what sticks. Slightly more politely, I see them as akin to privatisation of the enquiry process – with individuals and their agents doing work which would formerly have been done by the state.
Be that as it may, I was interested in the approach in the latest round of nudge letters – being sent to those whom HMRC believes have exceeded the lifetime limit for business asset disposal relief. These are not being sent to people operating in what HMRC considers to be high-risk areas, but where HMRC has specific information that relief has been overclaimed. In those circumstances I am not sure why HMRC is not using its TMA 1970, s 9ZB powers to amend the return itself. Unless I am missing something, it seems to be creating extra work for the sake of it.
I am not averse to the principle of nudge letters – they can be a useful tool. But we are getting further away from the basic principle established when self assessment was introduced – that HMRC was given time-limited enquiry powers which gave taxpayers responsibilities and safeguards so they knew exactly where they stood. There is certainly a case for reviewing whether the enquiry regime still gives the right balance between HMRC and the taxpayer. Perhaps this should be done before nudge letters simply become the order of the day.
If you do one thing...
There has been an exceptional level of interest in the Taxation Awards this year and we have decided to extend the deadline for entries to 10 March. So there is no excuse not to put in your entry form.
