From Nudge to Enquiry: How to Respond to HMRC Correctly

Dealing with HMRC Correspondence: What You Need to Know

Receiving a letter from HMRC can feel stressful, but you don’t have to face it unprepared. Whether it’s a casual reminder, a formal compliance check, or a request to correct your tax affairs, knowing how to respond properly can save you time, penalties, and unnecessary worry.

This overview explains the different types of HMRC letters, what they mean, and the right next steps to take.

What Are HMRC Nudge Letters?

A nudge letter is an informal communication from HMRC, not a full tax enquiry. They are sent to groups of taxpayers to highlight potential issues or encourage you to review your tax position.

There are two main types:

1. Educational Nudge Letters

These share updates on common tax errors, changes in legislation, or new HMRC guidance. They do not suggest you have made a mistake and typically do not require immediate action.

2. Data‑Based Nudge Letters

These are based on HMRC data matching, often linked to income, assets, or company records. They ask you to check your tax return and correct any errors you find.

Under Professional Conduct in Relation to Taxation (PCRT), if a nudge letter helps you identify an error over £200, you must inform HMRC. Ignoring these letters can lead to a formal compliance check.

If you receive a nudge letter:

• Review your tax return carefully

• Confirm in writing to HMRC if no error exists

• Make a disclosure if you need to correct your tax position

HMRC Formal Enquiries (Compliance Checks)

A formal enquiry means HMRC is actively investigating your tax return.

Key points you should know:

• HMRC normally has 12 months from the date you filed to open an enquiry

• For late returns, the window extends to 12 months plus the next quarter day

• A valid enquiry must state the legal basis and reason for the check

• HMRC can only enquire once per tax year for the same matter

COP9 Letters: Suspected Tax Fraud

A COP9 letter means HMRC suspects deliberate tax fraud. This is a serious matter.

• You have 60 days to respond

• You must provide a full outline disclosure

• Specialist tax investigation advice is strongly recommended

  
  

Accepting the process can lead to a civil settlement instead of criminal prosecution

If you disagree with HMRC during an enquiry, you can use:

• Statutory review

• Appeal to the Tax Tribunal

• Alternative dispute resolution (mediation)

Once concluded, HMRC will issue a closure notice.

HMRC Assessments & Time Limits

An assessment is HMRC’s formal demand for unpaid tax. Time limits apply as follows:

• 4 years for standard cases

• 6 years for careless errors

• 12 years for offshore matters (income tax, CGT, IHT)

• 20 years for deliberate non‑compliance

HMRC carries the burden of proof to show careless or deliberate behaviour. You may also submit consequential claims to adjust your tax position if needed.

How to Make a Disclosure to HMRC

If you need to correct past returns, you can use one of HMRC’s official disclosure routes.

1. Digital Disclosure Service (DDS)

The online portal for correcting historic returns that can no longer be amended.

• Requires a Government Gateway ID

• Suitable for most standard disclosures

• Complex cases may need a supporting letter and calculations

2. COP9 / Contractual Disclosure Facility

For cases involving suspected fraud. Offers civil settlement instead of criminal prosecution but requires full and accurate disclosure.

3. Specialist Disclosure Campaigns

HMRC runs targeted campaigns for fast‑track disclosures on priority areas. These do not provide criminal immunity.

How to Respond to HMRC Correctly

1. Do not ignore any correspondence from HMRC

2. Identify what type of letter you have received

3. Review your tax records carefully

4. Disclose any errors over £200

5. Get specialist advice for complex cases, COP9, or compliance checks

6. Respond in writing and keep copies of all documents

How We Can Help

Dealing with HMRC letters, enquiries, and disclosures can be complicated. We provide clear, practical guidance to help you respond correctly, protect your position, and resolve matters with HMRC efficiently. 

If you’ve received a letter from HMRC and want to take the right next steps, we are here to support you.