On 18 July 2022 HMRC published the mid-sized Business Customer Survey for 2021.

HMRC has commissioned a mid-sized Business Customer Survey each year since 2015 to measure general perceptions of HMRC and tax administration among mid-sized businesses, and to assess the effects of policy changes. The survey was conducted through a quantitative telephone survey and follow-up telephone interviews between September and December 2021.

Contact with HMRC

In 2021 more than half the mid-sized businesses surveyed had non-routine contact with HMRC, not including mailings or reminders. The most common reason given for contact with HMRC was the need for technical assistance or guidance in relation to specific taxes or reliefs. Other reasons for contact included questions concerning the pandemic; errors relating to taxes; or ongoing HMRC enquiries. Communications with HMRC on specific taxes most commonly related to VAT or PAYE.

Most of the businesses communicated electronically with HMRC using the facilities on the UK government website; or received communications through the post. Information from HMRC was obtained by 80% of the businesses through the UK government website; and telephone contact or the Business Tax Account were also used.

Customer experience

More than half of the businesses contacting HMRC directly had a generally positive experience, especially if the issue was resolved quickly and they received clear communication. Negative views of interactions were caused by poor service, for example when businesses felt they were being accused of intentional non-compliance; when HMRC staff sounded unsympathetic; or when there was a long waiting time on the telephone.

Positive ratings were given to HMRC for clarifying the steps to be taken; clarifying when matters were complete; and getting tax transactions right. The lowest ratings were given for the amount of time taken to reach the end result and the difficulty of finding information.

Taxpayer operations

Around 71% of the businesses surveyed used a tax agent or external accountant and the services most frequently performed by the agent was to calculate and file tax returns. The main area in which businesses required advice was corporation tax. The businesses used agents to save time and to ensure they were computing their taxes correctly.

Administrative burdens

Just over half of mid-sized businesses agreed that the overall level of administrative burden relating to tax compliance was reasonable. Around 21% of the businesses reported no administrative burden in relation to tax compliance. The most frequently mentioned sources of the tax compliance burden were value added tax (VAT) and corporation tax.

Making Tax Digital

The majority of mid-sized businesses kept records for VAT, most commonly through use of record keeping software. Just under half updated their records continuously and 23% updated them quarterly.

More than half of Mid-sized businesses had made changes in response to Making Tax Digital, for example by starting to use software or IT systems or changing the IT systems used for tax.

Almost half the mid-sized businesses used e-invoicing systems, but the understanding of e-invoicing varied. The main reason given for not adopting e-invoicing was satisfaction with existing processes and methods of invoicing.

Perceptions of compliance

Mid-sized businesses were asked their views on the acceptability of exploiting tax rules to gain a tax advantage that parliament did not intend. Of the businesses surveyed, 75% considered that tax avoidance was never acceptable; 16% considered that it was acceptable in some circumstances; and a small number considered that it was always acceptable.

HMRC enquiries

Around 30% of the mid-sized businesses had been subject to an HMRC enquiry, inspection or investigation in the previous five years, and of these 8% had been subject to an enquiry in the previous twelve months.

The larger mid-sized businesses were more likely to have been subject to an enquiry in the previous five years, including more than half the businesses with a turnover of GBP 50 million or more. Around 85% of the businesses that had been subject to an enquiry confirmed that it had been resolved.