Received an unexpected communication from HMRC? It could be part of a one to many approach
Have you received a communication from HM Revenue and Customs (HMRC) suggesting your tax might be wrong and/or asking you to double-check your tax position? If this communication seems to be written quite generally and is not a formal enquiry notice or compliance check, it may be part of a ‘one to many’ (OTM) approach. If you receive an OTM message from HMRC, it is important that you do not ignore it. Read on to find out more about the different types of OTM message and what to do if you receive one.
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What is HMRC’s one to many approach?
One to many (OTM) simply describes the process of HMRC sending out a standard message related to a specific topic to multiple taxpayers.
OTMs are informal. This means that HMRC are not using formal, legal powers when they send OTM communications out. Instead, HMRC use OTMs to influence and encourage taxpayers to comply with their tax obligations, get their tax affairs right or to correct previous errors in their tax affairs voluntarily, without the need for a formal compliance check.
An OTM communication is not a compliance check. A compliance check involves HMRC communicating with a taxpayer on a one-to-one basis and asking them specific questions about their tax affairs. It might also involve HMRC asking to see documents related to the taxpayer’s tax.
HMRC use an OTM approach because it can be a more efficient way to contact many taxpayers with a standard communication, rather than trying to tailor communications to each individual taxpayer.
Why have I received a one to many communication?
OTMs are targeted campaigns. HMRC do not send out OTM communications on a random basis.
HMRC have a strict internal process before they can send out OTM communications, including checking that it is appropriate for them to use an OTM approach.
Compliance risk
When HMRC carry out an OTM approach, first of all, they identify a tax risk that may affect a number of taxpayers. Normally this will be an area of tax where they think a significant number of taxpayers are getting it wrong and might be underpaying tax.
Target groups
Once HMRC have identified the compliance risk, they decide which groups they are going to target with their OTM communications.
HMRC may select taxpayers based on a number of different factors, including:
- Region – where a taxpayer lives or where a business is registered
- Trade sector
- Types of taxpayer – individuals, partnerships, companies
Sometimes HMRC will also select a control group, if they wish to trial a new message. This means that, for example, some people in the target group may receive one message, and others may either receive a different message or no message at all.
Communication methods
HMRC use various methods to deliver their OTM communications.
At the moment HMRC usually send OTM communications by letter. However, HMRC also deliver OTM communications via your personal tax account, by email, by SMS text messages and by telephone call. If you have a tax adviser, they may send a copy of the message to your adviser.
Sometimes HMRC send OTM communications to tax advisers only. We discuss these agent OTMs later in this article.
Different types of one to many approach
HMRC use the OTM approach for different reasons. HMRC tailor the OTM communication based on the outcome they hope to achieve. This affects:
- the type of information included in the communication;
- the format of the communication;
- how they deliver the communication to you;
- what type of action you need to take in response.
We take a look at some of the different types of OTM approach you might come across.
- Educational prompt
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HMRC may send you a short reminder or a prompt. These are generally intended to encourage you to take a particular action.
Example: educational prompt
HMRC have identified that a particular group of taxpayers is likely to submit their online self assessment tax return late. HMRC send out an email reminder to that group of taxpayers, reminding them that they need to submit their online tax return for the tax year 2023/24 by 31 January 2025.
The taxpayers that receive the educational message have not yet failed to submit their self assessment tax return on time.
The purpose of the OTM communication from HMRC is to encourage the taxpayers to submit their tax returns on time.
- Nudge to encourage taxpayer to check and correct their tax affairs
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HMRC may use this type of OTM communication when they identify that a particular group of taxpayers may have made a specific type of error. With this type of approach, HMRC have identified a risk, but they are not certain that all the taxpayers in the target group have made an error. They are likely to send a letter of one to two pages in length. This should explain why they think you might have made a mistake in your tax return. The letter will also direct you to guidance on GOV.UK to help you correct any errors.
This type of letter will normally ask you to make any correction within a set timeframe, for example, 30 days from the date of the letter.
If you think your tax affairs are correct, the letter will usually say that you do not need to take any action – so you do not need to let HMRC know. This might not always be the case, so read the letter carefully in case HMRC do expect you to contact them – even if you are satisfied your tax affairs are correct.
Even if you are satisfied that your tax affairs are in order, be aware that HMRC are likely to check their records. If HMRC have any concerns, they may open a formal compliance check.
- Nudge to encourage taxpayer to make a voluntary disclosure
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If HMRC identify a group of taxpayers that they think are making or have made significant errors in their tax affairs, they may use an OTM approach to encourage the taxpayers to make a voluntary disclosure. This allows taxpayers to correct a number of previous tax years, and also sets them on the correct path for current and future tax years.
This type of letter will normally ask you to let HMRC know within 30 days if you need to make a voluntary disclosure. You are then given a longer time period, such as 60 or 90 days, to make the disclosure.
If you think your tax affairs are correct, the letter will usually say that you do not need to take any action – so you do not need to let HMRC know. This might not always be the case, so read the letter carefully in case HMRC do expect you to contact them – even if you are satisfied your tax affairs are correct.
Even if you are satisfied that your tax affairs are in order, be aware that HMRC are likely to check their records. If HMRC have any concerns, they may open a formal compliance check.
- One to many agent letters
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In some cases, HMRC do not contact the taxpayer directly. Instead, they contact tax advisers, who may have several clients that are affected by the topic of the OTM message. This is more cost-effective for HMRC, as they only have to contact one tax adviser, rather than many taxpayers.
HMRC normally use this approach to ask the tax adviser to check the tax position of some of their clients, and to make amendments if necessary.
When HMRC do this, they do not tell the taxpayer about the OTM message.
If such an OTM approach affects you and your tax position, your tax adviser should contact you. They should let you know they have received a query about your tax position and discuss with you how to respond to HMRC.
Your tax adviser should not amend your tax affairs or disclose further information to HMRC without your consent.
If you do not have a tax adviser or agent, then this sort of OTM campaign would not apply to you.
What to do if you receive a one to many communication
Try not to panic if you receive an OTM communication from HMRC.
HMRC may have identified that you have made a mistake or failed to meet a tax obligation. Equally, you may have a valid explanation for what you have done (or not done) in respect of your tax. Innocent taxpayers, who have not made an error, can also receive OTM communications.
Although an OTM approach is not a formal compliance check, and you are under no legal obligation to reply, if you do not respond, HMRC may decide to open a formal compliance check into your tax affairs.
Here we set out what you need to do if you receive an OTM communication:
- Read the OTM communication carefully
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Read the communication carefully. Regardless of what type of OTM approach is involved, the communication should set out clearly:
- Why they have contacted you
- What they want you to do
- Any deadlines that apply
- What will happen if you do respond
- What will happen if you do not respond
- Check your tax affairs carefully
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Even if you think the contents of the communication do not apply to you, you should check your tax affairs carefully.
The OTM communication should direct you to guidance on GOV.UK that will help you check the issue HMRC are concerned about.
If you need help to do this, consider contacting HMRC or a professional tax adviser. There should be contact details for HMRC on the OTM communication. There is guidance on how to find a tax adviser on our Getting help page.
- If your tax affairs are in order
- If your tax affairs are not in order
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If you check your tax affairs and think you have made a mistake, you should usually follow the instructions in the OTM communication – this should set out what you need to do to put things right. Generally, if you come forward voluntarily, any penalties will be lower. If you do nothing, HMRC may open a compliance check. If they find errors at that point, penalties are likely to be higher.
The OTM communication may indicate whether HMRC will treat any disclosure or amendment as prompted or unprompted for the purpose of calculating penalties. You can read more about penalties for errors in our guidance.
If your errors or failure to comply were deliberate, you should seek advice from a tax adviser before replying to HMRC. This can be a complex area, and rather than responding to this informal OTM approach from HMRC, you might be better to make a disclosure to HMRC using a formal route. You can read out more about how to find a tax adviser on our Getting help page.
Deadline to respond
Many OTM communications contain deadlines by which HMRC expect you to respond. These are often 30 days from the date on the communication. In many cases, these deadlines do not match the relevant legal deadline for a particular action. This is because OTM communications are informal, and they are trying to encourage you to act voluntarily. If you do not respond within the timescale that HMRC set out in the letter, they may open up a formal compliance check into your tax affairs. This can take a lot of time to deal with and you may need to pay a tax adviser to help you deal with it.
If you do not think you can do what HMRC are asking within the timescale set out in the letter, you should contact HMRC as soon as possible. There should be contact details on the letter. You should ask HMRC about agreeing a more realistic timescale.
Certificate of tax position
Some OTM communications include a certificate of tax position. The letter asks you to complete and return this certificate to HMRC.
The certificate asks the taxpayer to confirm if their tax affairs are correct and complete or not. It also includes a declaration noting that it is a criminal offence to knowingly make a false statement in order to evade tax.
It is unlikely to be beneficial to sign the certificate.
You do not have an obligation to sign and return the certificate to HMRC – they cannot force you to do so. If you sign and return the certificate, be aware that, if the declaration is found to be incorrect, not only could this affect any penalties you have to pay, but it may also result in criminal prosecution.
If you check your tax affairs, and think everything is okay, you should consider writing to HMRC to explain why you think your tax affairs are in order. This might prevent them opening a compliance check or asking further questions.
If you are unsure about your tax affairs and about what action to take, we suggest you seek advice from a professional tax adviser. You can read out more about how to find a tax adviser on our Getting help page.
