ABAB report finds worsening customer experience with HMRC

The Administrative Burdens Advisory Board (ABAB) has released its 'Tell ABAB report 2023 to 2024'. This demonstrates a lack of awareness around Making Tax Digital (MTD) for Income Tax, poor channels of communication with HMRC and a worsening 'customer experience'.

The Administrative Burdens Advisory Board (ABAB) represents the small business community and provides detailed research to HMRC on its policies and procedures. For small businesses, it aims to:

• Help to reduce administrative burdens.
• Ensure that the tax system is easier, quicker and simpler.

This year's survey had a record 10,052 responses, up from 2,500 last year. 84% of responses came from businesses and 16% from agents.

The highest proportion of respondents (32.9%) declared a turnover of less than £85,000. 82.2% had a turnover of less than £1m.

Findings of note include:

• There was a lack of awareness of the next phase of Making Tax Digital (MTD) for Income Tax.
  • A majority felt there would be no benefits moving to MTD for Income Tax and increased costs are anticipated.
• Most respondents considered HMRC’s webchat, telephone and app channels of communication to be poor.
• Less than 2% believed that legislative burdens regarding tax compliance had improved in the last year. 
• Over a third of respondents, and almost 90% of agents, felt that their customer experience when engaging with HMRC had worsened over the last year.
• 63% of respondents said that response times on HMRC helplines were poor. 
  • This jumped considerably from 43.1% in 2023.
• Over a third of people who had used HMRC’s Check Employment Status for Tax (CEST) tool found it unhelpful.

Making Tax Digital (MTD) for Income Tax

From April 2026, landlords and sole traders with a turnover over £50,000 will be required to keep records digitally and provide quarterly updates of income and expenditure using MTD-compatible software.

Respondents were asked how aware they were of the next phase of MTD for Income Tax:

• 43.8% were either not aware or did not know about MTD for Income Tax at all.
• 33.3% of those who answered were either aware or very aware.
• 23.0% considered they were slightly aware.

MTD for Income Tax was expected by respondents to have a significant impact on cost and time relating to both submitting quarterly updates and keeping digital records:

With what they knew when answering, respondents were asked what benefits moving to MTD for Income Tax would bring to their business/clients. The majority of those who answered considered that there would be no benefits:

HMRC communications and engagement

Survey respondents were asked to rate the usefulness of varying channels of communication with HMRC. 

• Across all services, the majority of respondents rated usefulness as ‘poor’. Webchat fared worst of all: 

• Customer experience
  • 3.9% of respondents remarked that their customer experience when engaging with HMRC had improved in the last 12 months. This response was given by 1% of agents and 4% of businesses. 
  • 54.0% of respondents said that it had ‘stayed the same’. This response was given by 12% of agents and 63% of businesses. 
  • 42.2% said it had ‘worsened’. This response was given by 87% of agents and 33% of businesses. 
• Legislative burden and impact
  
  • 49.1% of respondents considered that the legislative burden in regard to tax compliance had worsened during the last 12 months.
  • 48.1% felt that it had stayed the same.
  • 1.7% were of the opinion that it had improved. 
• Helpline response times
  • 63.0% of respondents said that response times on HMRC helplines were poor. 
  • 18.0% answered that response times were bad.
  • Only 1.9% of respondents rated the response times as very good. 
• YouTube
  • 30.4% of the survey's respondents had watched any of HMRC’s YouTube videos. Of those that had seen the YouTube videos:
    • 52.2% said they had found them through HMRC communications.
    • 33.0% from GOV.UK.
    • 11.9% discovered them through Google.
    • 2.9% were referred by a friend or associate.
  • On rating HMRC YouTube videos, 41.7% rated them as ‘good’ and 5.3% rated them as ‘excellent’. 
• Business tax information and HMRC guidance
  • 41.0% of respondents who answered this question obtained information to help with business tax affairs from GOV.UK.
  • 40.6% got information from their agents and accountants.
  • There was a smaller proportion of respondents saying they obtained information from groups such as professional bodies, publications, and non-government contacts.
• Usefulness of HMRC guidance
  • 42.4% felt that HMRC's guidance was helpful. 
  • 41.5% voted that guidance was average. 
  • 16.1% considered that HMRC guidance was unhelpful. 
• Written correspondence
  • Most respondents (44.2%) answered ‘average’ when asked how easy it was to read HMRC written correspondence.
  • 31.6% answered that it was ‘easy’.
  • 11.5% that it was ‘very easy’ to read.
  • 9.3% found it ‘difficult’ and 3.4% found correspondence ‘very difficult’ to read.
• Benefits-In-Kind
  • Of those who had previously reported Benefits-In-Kind using the P11D form but now payroll those benefits, 11% found the P11D less burdensome, compared to 4% who preferred the current process of Payrolling.
• Artificial Intelligence (AI)
  • 11.8% of replies reported having used a generative AI system such as Chat GPT to seek an answer to a tax query.
  • Of those, 22.8% felt they received an answer which resolved their query. 

Time To Pay (TTP)

• 39.6% of respondents were aware of HMRC’s Time To Pay (TTP) arrangements, while 60.4% were not.
• 16.1% had experience of using TTP arrangements.
• Only 2.4% of total respondents had used an online TTP self-service.
• Of those that had not used self-service TTP:
  • 39.1% preferred to speak to an operative.
  • 33.8% were not aware of the service.
  • 27% tried to use the service but did not meet the criteria.

Personal and Business Tax Accounts

• 26.8% stated that they had used the Business Tax Account, with 26.7% having used the Personal Tax Account.
• The majority of respondents reported no effect on business tax administration burden from the use of either service. 

Off-Payroll Working (OPW)

• 9.1% of respondents said that they used the Check Employment Status for Tax (CEST) tool.
  • 63.1% of respondents who had used CEST found it helpful and 36.9% did not.
• 5.0% of respondents (9.1% of those who answered) said that they had used the new online OPW guidance.

Of those who had used the new online OPW guidance, 71.3% found it not useful to use. 28.5% found it difficult or very difficult to use (note: respondents could select two responses to this question):

Basis Period Reform

Only agents were asked about Basis Period Reform.

• 96.3% of agents said that they were aware of the changes proposed to Basis Period Reform to some degree, with 56.2% saying they were very aware. 
• 21.1% believed the change would result in an improvement in business taxation and reduce businesses' compliance costs in the long term.
  • 51.1% answered no, and 27.8% were unsure.

Working from home and nomadic workers

When asked whether they have employees Working from home or nomadic workers, 54.4% of respondents answered ‘yes’. This is a notable drop from the 64.0% answering 'yes' in the previous year.

• 58.8% of those answering yes were familiar with HMRC’s working-from-home guidance.
• Of those who were familiar, 75.9% found the guidance easy to follow.
• 68.3% of working-from-home respondents said there had been ‘no effect’ administratively on their business.

Useful guides on this topic 

MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken?

Compare software for Making Tax Digital for Income Tax
What's the cheapest software I can use for Making Tax Digital for Income Tax? What is the best value software that I can use?

IR35
What is IR35? How does it work? How is the deemed payment calculated? What expenses are deductible?

Basis Period reform
What is basis period reform? Who is affected? What is the new basis year for tax? What are the transitional rules?

Working from home (employees)
What expenses can employees claim for homeworking? Are the rules the same for the self-employed? How do you make a claim?

External link

Tell ABAB report 2023 to 2024

Return to Ross Martin Tax: SME Tax News 26 September 2024