The UK tax administration HMRC plans to extend online tax accounts to all individuals and businesses paying tax in the UK. To prepare for this customer research was performed to look at the reaction of difference groups of taxpayers and to help in formulating communication of the digital plans. The results of the research were published on 27 January 2016.
Tax agents were found to have a positive attitude to the introduction of online tax accounts. They already use HMRC’s online services and were interested in the reduction to paperwork, easier registration and ability to integrate accountancy software that could result from using online tax accounts.
Small and medium sized enterprises (SMEs) were also positive towards the proposals. In addition to the ability to integrate accountancy software with the system of online tax accounts they were also interested in the ability to make quick payments, maintain digital records and obtain assistance in tax compliance. They saw the online tax account as representing a reduction in compliance time and effort. There were therefore few barriers to adoption of online tax accounts by SMEs although some were concerned about the ability of HMRC to deliver the promised digital improvements.
Individuals currently paying tax under self-assessment also saw the potential for a reduction in the time and stress involved in managing their tax affairs and welcomed a move to real time tax management and away from the process of filing an annual tax return. Many of these taxpayers were already using digital tools offered by HMRC and wanted them to be extended. Others in this category of taxpayers were however still filing paper tax returns and some of these were reluctant to use an enhanced digital service.
They would however also prefer more information about their entitlements to allowances and relief under the tax system. These taxpayers had some concerns about the security of the proposed systems. Some of these taxpayers preferred the old method of paper tax returns and assistance by tax agents.
PAYE taxpayers were less enthusiastic about the proposed online tax accounts. Many of these taxpayers did not see any need for a digital account and had concerns about the security of the digital system. As tax under PAYE is dealt with by employers many of these taxpayers did not see tax as their responsibility. They were also concerned about the perceived complexity of online tax accounts. Those with more complicated tax affairs and a history of contact with HMRC were more interested in engaging digitally with HMRC. There were also some in this category who were interested in a better understanding of tax and these would also be open to digital engagement.
HMRC concludes from this research that a prominent campaign using traditional methods of communication may be necessary to persuade many PAYE customers to try using the digital tax account. SMEs and self assessment taxpayers are already engaged digitally with HMRC and communication with these groups can be direct and digital. The theme considered the most compelling for a campaign promoting digital tax accounts would point out that they represent a quicker and easier way to get tax right. A theme that might be persuasive for SMEs and self assessment customers would be to point out that the tax affairs could be dealt with all in one place. With PAYE customers a campaign could emphasize to taxpayers that using the online system is easier than they think.