Date posted: 5th May 2026
HMRC has recently increased its use of so-called “one-to-many” nudge letters to businesses it believes may have failed to register for VAT. These letters are not formal enquiries, but they are a clear signal that HMRC has identified potential discrepancies based on the data it holds.
Why you may have received a letter
HMRC uses a wide range of data sources to identify businesses that could have exceeded the VAT registration threshold (currently £90,000). This includes information from:
- Submitted tax returns.
- Third-party data (such as payment processors or industry bodies).
- Online platforms and digital sales records.
If HMRC believes your turnover may have crossed the threshold, it may issue a one-to-many letter asking you to review your position.
What the letter requires you to do
Typically, the letter will ask you to:
- Review your taxable turnover for the relevant period
- Confirm whether you should have registered for VAT
- Take corrective action if necessary
This may include registering for VAT with a backdated effective date and accounting for any VAT due.
Why it’s important not to ignore it
Although these letters are not formal compliance checks, ignoring them can increase the risk of further HMRC intervention. If HMRC later opens an enquiry and finds that VAT registration was required, penalties and interest may apply.
Responding promptly and accurately can help reduce potential exposure to penalties, particularly if any disclosure is unprompted.
Common areas of confusion
We often see issues arise where businesses:
- Misunderstand what counts towards taxable turnover.
- Fail to monitor turnover on a rolling 12-month basis.
- Incorrectly treat certain income as outside the scope of VAT.
These errors can lead to delayed registration and unexpected VAT liabilities.
How we can help
If you’ve received a one-to-many letter, it’s important to assess your position carefully. We can help you:
- Review your turnover and VAT obligations.
- Determine whether registration is required.
- Calculate any potential VAT liabilities.
- Make disclosures to HMRC and manage correspondence.
- Comply with the Making Tax Digital requirements.
Taking early advice can make a significant difference in both outcome and peace of mind.
If you have received a letter from HMRC or are unsure about your VAT position, please get in touch with our VAT team.
