HMRC compliance drive: Understanding the £100k threshold letters

HMRC has announced that it’s writing to people that they believe earned over £100,000 in 2022-23 and didn’t file a tax return. The letter encourages the recipient to check their tax affairs, giving several reasons why it may be necessary to file a tax return, including receiving rental income, self-employment income and interest on savings.

The purpose of the letter is to persuade the recipient to make a voluntary disclosure and regularise their tax affairs. The letters are commonly referred to as ‘One to Many’ letters, as the same letter is sent out in batches to a particular class of taxpayers. HMRC’s compliance costs are nominal, as the costs of checking if there’s tax owed rests with the recipient.

While there’s no statutory requirement to respond to the letter, HMRC states that if a return needs to be filed, this must be done within 60 days of the date of the letter. Furthermore, anyone that considers that they do not need to file a return is asked to contact HMRC.

If HMRC considers that the recipient needs to file a return and they don’t take the appropriate action, HMRC can decide the estimated tax due and charge a higher tax geared penalty.

The UK tax code contains legislation that requires anyone that needs to register to file a return to do so within six months of the end of the relevant year or they could face tax-geared penalties for not notifying HMRC of their liability. Interest is also payable on tax paid late.

If you receive an HMRC letter asking you to check if you need to file a tax return, you should either seek specialist tax advice or follow the steps on HMRC’s website to check what you should do. It’s important that the letter is taken seriously and care taken when checking your tax position.

If you’re affected by this or want to know more, please contact Moore Kingston Smith for a confidential, no obligation call. We specialise in advising clients on their tax compliance and regularising historical tax issues. We follow a three-stage process to assess your historical tax position, review the current tax year and consider your options going forwards.

We know how important it is to respond to HMRC to minimise your exposure, and we can liaise with HMRC on your behalf so you don’t have to.

For further information on how we can assist, please either complete the inquiry form or call John Hood on 020 4582 1440 for a confidential discussion about how we can help.