HMRC sends out ‘worrying’ letters

By Charles King

Doctors are being warned of delays in payment of self-assessment tax refunds, and a threat to remove individuals from the self-assessment regime, unless ‘extensive and onerous’ information is provided to tax officials.

Accountants report a dramatic increase in letters from HM Revenue and Customs (HMRC) to clients demanding documents and information it calls ‘security procedures’ to ensure the ‘repayment amount claimed is correct’.

These security checks are ‘unusual and worrying’, according to Debbie Wilson, a tax expert and director at specialist medical accountants Hillier Hopkins, Watford. 

She said although HMRC states in these letters that they are not an investigation into the self-assessment return itself, they could easily be misconstrued as one due to the threatening language used and implications if an individual fails to respond within 30 days. 

‘Individuals face removal from the self-assessment regime and delays on receiving grants under the Self-Employment Income Support Scheme.

‘While we totally understand HMRC’s need to prevent fraudulent reclaims, individuals expecting a tax refund are being hit with the suggestion that their tax affairs are questionable and deliberately wrong.’

Taxpayers are asked to complete form R38, requiring extensive information, plus proof of identity and address. 

Ms Wilson said HMRC had dismissed these letters as no more than a simple identity check. But she warned that its ‘aggressive and threatening nature’ would worry many taxpayers expecting a refund.

She added: ‘HMRC has confirmed that these letters are triggered when unspecified “risk indicators suggest that the customer or claim may not be legitimate”. 

‘Despite the language used by HMRC, we would reassure individuals who receive such a letter not to panic or worry unduly. While it might sound like a tax investigation, it isn’t. 

‘The letter shouldn’t, however, be ignored and you should ask your accountant or tax adviser for guidance on completing the required paperwork.’

HMRC recognised these letters would arrive on doorsteps of individuals making entirely legitimate claims.