The CIOT has reported on this latest one-to-many campaign by HMRC, aimed at taxpayers suspected by HMRC of failing to declare income from dividends or other distributions.
HMRC are contacting taxpayers where a large drop in the company’s profit and loss account reserves indicates that dividends may have been received but not declared.
As would be expected, taxpayers who do need to declare income are given instructions on how to do that. More controversially, however, the letter being sent out says that “You need to let us know” even if taxpayers do not have further income to declare.
A one-to-many approach is where HMRC send one standard message to many customers. The aim is to influence customers’ behaviour, so they are more likely to comply with their tax obligations. A one-to-many approach is not a compliance check.
Readers may also be interested in the ICAEW take on this HMRC campaign, which points out that the recommended method of reporting undeclared income may not always be the most appropriate.