HMRC nudge letters for medical professionals: what to do next

A nudge letter is not a routine reminder. HMRC is likely to have compared third-party information with the figures reported in your tax return, and so, if you receive one, it’s vital you carefully review before responding.

What is an HMRC nudge letter? 

Nudge letters are designed to encourage taxpayers to check their position and correct any errors voluntarily. For medical consultants, HMRC may hold information regarding private medical income that it believes does not match their filed tax position. 

In other cases, HMRC may open a formal enquiry and request records directly instead of first inviting a voluntary disclosure.

What should you do if you receive a letter? 

Do not ignore it. Before responding:

• check the deadline and the tax years referred to
• compare the information held by HMRC with your tax returns, accounts and supporting records
• review all relevant sources of private practice income and related expenses
• take advice before signing any declaration or confirming that the filed position is correct

If there is any uncertainty, speak to an adviser immediately. A response made without a full review can make the position harder to resolve.

What happens if a disclosure is needed?

HMRC will need to be notified that a disclosure is required. HMRC will then usually set a period for the taxpayer to provide a full explanation of the omitted or incorrect amounts, the tax and interest due, how the position has been corrected and why the error happened.

Historic tax years may also need to be considered. The period HMRC can assess depends on the circumstances and the behaviour that led to the error.

Penalties may apply, although the outcome depends on factors including whether the disclosure was prompted, the underlying behaviour and the quality of the taxpayer’s co-operation.

Choosing the right disclosure route matters

The appropriate disclosure facility depends on the facts. If a taxpayer knew that a return was wrong, specialist advice is particularly important so that the disclosure is made through the correct route and provides the best available protection.

Do not submit a generic correction or contact HMRC informally before the position and disclosure route have been assessed.

What if HMRC opens an enquiry?

An enquiry notice may be accompanied by a broad information request covering income, expenses, bank accounts and supporting records. HMRC has extensive information powers, but requests should still be reviewed for relevance, scope and the period covered.

Professional support can help manage correspondence, provide the right information in a controlled way and keep the enquiry moving towards a conclusion. Full and timely co-operation can also be relevant when HMRC considers penalties. 

What if you have not received a letter?

If you are concerned that private medical income or another item may have been reported incorrectly, consider taking advice now. An unprompted disclosure can lead to a better penalty position than waiting for HMRC to make contact and is generally less disruptive than a later enquiry.

Key takeaways 

• Do not ignore the letter or respond before completing a full review
• Check all private practice income, expenses and supporting records for the tax years concerned.
• Take specialist advice before signing a declaration or selecting a disclosure route.
• If you have not received a letter but are concerned about an error, consider acting before HMRC contacts you.