ARTICLE · 27 JULY 2022

UK Tax Authority (HMRC) ‘Nudge' Letters

Dixcart Group Limited

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As the UK tax authority (‘HMRC'), are returning to normal operations, they are revising their approach to encourage compliance. HMRC have at their disposal vast pools of information...

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As the UK tax authority ('HMRC'), are returning to normal operations, they are revising their approach to encourage compliance. HMRC have at their disposal vast pools of information from overseas jurisdictions, from Companies House and from the Land Registry. They are using this data to subtly push people towards compliance, which is why they are called 'nudge' letters. The letter is designed to prompt or nudge the taxpayer into reviewing their tax returns and finances to determine whether further income or gains need to be notified to HMRC.

HMRC has recently issued 'nudge' letters to UK taxpayers who it believes hold crypto assets. The letter advises them that Capital Gains Tax issues can arise on any gains realised from the sale, or deemed disposal, of crypto assets. This can include the outright sale of crypto assets for cash, exchanging one crypto asset for another or using crypto assets to acquire goods or services.

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