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Taxpayers get a nudge
HM Revenue & Customs (HMRC) has come under fire for the use of so-called ‘nudge’ letters sent by its Behavioural Insights Team.
Letters are being sent directly to individuals that are involved in tax disputes instead of via their lawyers or accountants. The language in the letters is used in such a way as to subconsciously ‘nudge’ them into settling the disputes.
The Behavioural Insights Team was originally set up as a central Whitehall function in 2010 in order to subtly alter the way people behave. HMRC has also set up its own ‘nudge’ unit to target high net worth individuals and other taxpayers that they suspect of not paying the correct amount of tax.
According to a study of the practice undertaken by law firm RPC, the sending of these letters directly to clients in any other areas of litigation would be seen as applying undue pressure and would almost certainly be frowned upon by regulators.
Link: The Behavioural Insights Team