Introduction
If you’ve received a nudge letter from HMRC and replied, it’s natural to assume that’s the end of the matter.
For many landlords, that assumption is where things start to go wrong.
Replying to a nudge letter does not close the issue.
It tells HMRC how to assess your risk and what to do next.
This is why understanding what happens after you reply is critical.
I’ve also recorded a video walking through what happens after you reply to an HMRC nudge letter and where landlords unintentionally increase their risk.
🎥 If you prefer to watch rather than read, this video walks through what happens after you reply to an HMRC nudge letter and where landlords unintentionally increase their risk. Video is live on Sunday
You can continue reading the full written guide below.
What an HMRC Nudge Letter Really Means
A nudge letter is not a general reminder and it is not sent at random.
HMRC issue nudge letters when:
- Their data suggests rental income may exist
- There is a mismatch between information sources
- A property transaction or rental activity has been flagged
These letters are part of HMRC’s compliance strategy.
They are designed to prompt action and test awareness.
What Happens Inside HMRC After You Reply
When you respond to a nudge letter, HMRC will:
- Log your response on your tax record
- Compare what you’ve said against existing data
- Assess whether your reply reduces or increases perceived risk
HMRC are not looking for reassurance.
They are assessing accuracy, credibility and consistency.
Your response helps determine whether the matter ends quietly or escalates.
Why Vague Replies Often Lead to Follow-Ups
Replies such as:
- “I’m looking into it”
- “I didn’t realise this applied to me”
- “I’ll sort this soon”
are rarely neutral.
In practice, these replies often trigger:
- Further correspondence
- Requests to register for Self Assessment
- Requests for figures or explanations
From HMRC’s perspective, vague replies suggest uncertainty rather than resolution.
If you’re unsure how to respond to HMRC in the first place, I’ve set out what to do — and what to avoid — in Received a Letter from HMRC About Rental Income? What to Do (and What Not to Do).
Silence After Replying Is a Serious Mistake
One of the most common errors landlords make is replying once and then doing nothing.
Once you’ve engaged:
- HMRC expect progress
- Delays raise concern
- Silence increases compliance risk
From HMRC’s point of view, acknowledging an issue and failing to act is worse than not replying at all.
Common Assumptions HMRC Do Not Accept
Landlords often assume:
- Small amounts of rental income don’t matter
- Short-term or temporary letting doesn’t count
- PAYE income means rental income is covered
- HMRC will tell them exactly what to do next
HMRC do not work on assumptions.
They expect you to understand and meet your reporting obligations.
This situation often applies to landlords who never registered for Self Assessment because they assumed HMRC would tell them if it was required — something I cover in I Never Registered for Self Assessment – What Happens If HMRC Find Out?.
When HMRC Decide to Escalate
If HMRC see inconsistencies or unresolved issues, they may:
- Ask for multiple tax years
- Review expense claims
- Expand checks beyond rental income
- Move from informal contact to formal compliance checks
At this stage, the issue is no longer “just a letter”.
This is why landlords are often confused when HMRC raise questions years later — I explain this in more detail in Why HMRC Contact Landlords Years Later (and What to Do).
What You Should Do Before Replying
Before replying to an HMRC nudge letter, you should:
- Confirm whether rental income exists
- Identify which tax years are affected
- Check what should have been declared
- Understand what HMRC are likely to question
Replying without clarity can increase exposure rather than reduce it.
Final Thought
A nudge letter is an opportunity — but only if handled correctly.
Replying without understanding what your response triggers can increase risk rather than reduce it.
If you’d like professional help reviewing your position, you can book a paid diagnostic consultation to understand your next steps.