HMRC has been sending out around 1,000 'nudge' letters to individuals paying tax at a lower-than-expected effective tax rates. This is a trial and not publicised campaign.

The idea behind the use of nudge letters, which have been issued by HMRC in various mini-campaigns targeting different taxpayer groups since the current government came to power, is that on one hand a more personalised approach by HMRC achieves better results than a scatter gun approach and that using the basics of behavioural psychology taxpayers can be subconsciously nudged to change their behaviour.

The current nudge pilot has received criticism. In its letters HMRC refers to 2011/12 returns which are already closed for enquiry and in some cases the effective tax rate is lower than it might be because of losses, pension contributions amd gift aid donations. Has there been an error by HMRC or, was the idea of the nudge to encourage even more use of tax reliefs in the preparation of their 2013/14 return? It is difficult to tell.

 

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