We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
HMRC’s One to Many (OTM) letters for non-submission of tax returns are a key tool in the tax authority’s communication strategy. These letters serve to convey standard messages to multiple taxpayers simultaneously, with the primary goal of influencing taxpayer behaviour and encouraging compliance with tax obligations.
In the specific case of non-submission, HMRC sends OTM letters to taxpayers who have received a notice to file a self-assessment tax return but have not yet submitted it. The content of these letters typically reminds taxpayers of deadlines and requirements and may highlight potential discrepancies in the taxpayer’s records.
These letters are sent directly to individuals and/or their agents if they are represented.
In some cases, HMRC targets specific groups, such as Persons of Significant Control (PSC) of limited companies.
One example is the letter aimed at those who failed to submit a personal tax return for 2022/23, another for those whose 2022/23 and/or 2023/24 personal tax returns recorded lower income levels than HMRC would have expected. Those in receipt of the first letter had until 23 August 2024 to submit a 2022/23 return; those in receipt of the second letter had until the same day to ensure those years’ tax returns are complete and accurate.
Another example is the letter aimed at those taxpayers who made a claim for Investors’ Relief in their 2022/23 tax returns. There are two letters being sent out:
- one to those whom HMRC believes do not qualify for such a claim
- one to those whose information provided is insufficient to verify their claim.
Recipients are invited to amend their returns within 30 days of the letter date or face potential penalties if HMRC subsequently opens an enquiry and errors are found.
While there’s no legal obligation to respond to OTM letters, they should be treated seriously. Informal requests may be forerunners to formal requests compelling the disclosure of data. Consequently, it may be sensible to comply with such requests. Recipients are typically asked to review their tax affairs and take necessary actions, such as submitting outstanding returns. These letters are part of HMRC’s strategy to encourage voluntary compliance and reduce the need for more formal enforcement actions, which can be costly and time-consuming.
