ABAB report finds slight improvement in interaction with HMRC

The Administrative Burdens Advisory Board (ABAB) has released its 'Tell ABAB report 2024 to 2025'. This demonstrates increasing levels of awareness around Making Tax Digital (MTD) for Income Tax, poor channels of communication with HMRC and a slight improvement in 'customer experience'.

Admin_in_blocks

The Administrative Burdens Advisory Board (ABAB) represents the small business community and provides detailed research to HMRC on their 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 3,146 responses, down substantially from 10,052 last year. 77% of responses came from businesses and 23% from agents.

Findings of note include:

  • There are increasing levels of awareness of Making Tax Digital (MTD) for Income Tax. 
    • The mandatory nature of this programme is not popular.
    • It is felt that new quarterly updates will require significantly increased time and costs to manage.
    • The majority of businesses do not expect any benefits from MTD for Income Tax.
  • Respondents described HMRC’s webchat, telephone and app channels of communication to be poor, which is a trend continuing from previous years. 
  • HMRC letters not being in plain English continue to be a common complaint, as are concerns over the tone of letters, which often feel too harsh or threatening.
  • HMRC guidance was generally thought to be helpful, although sometimes difficult to access. 
    • GenAI is increasingly being used to seek answers to tax queries, although users are relying on it without cross-checking with other sources.
  • Awareness of taxpayer support programmes like Payments on Account and Time to Pay is low.
  • 57% of respondents believed the legislative burdens associated with tax compliance had worsened, an increase of 7.7% from last year.

Making Tax Digital (MTD) for Income Tax

Respondents were informed that HMRC will require landlords and sole traders with a turnover over £50,000 to keep records digitally and provide quarterly updates of income and expenditure using MTD-compatible software from April 2026.

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

  • 28.1% were either not aware or did not know about MTD for Income Tax at all. This has come down from 43.8% last year.
  • 46.4% of those who answered were either aware or very aware.
  • 25.5% thought they were slightly aware.

40% of respondents supported the emphasis on the use of software to interact with HMRC, but were not in favour of software use being mandatory. 

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:

  Quarterly updates Keeping digital records
Perceived impact MTD effect on cost MTD effect on time MTD effect on cost MTD effect on time
Increase significantly 40.8% 35.9% 40.7% 38.6%
Increase slightly 31.0% 28.6% 28.4% 29.3%
No significant effects 26.0% 28.7% 27.1% 27.6%
Reduce slightly 1.3% 5.4% 2.5% 3.0%
Reduce significantly 0.9% 1.4% 1.3% 1.5%

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:

Benefits As a percentage of answered
No benefits 65.2%
Up-to-date picture of the business finances 10.7%
More accurate records 8.8%
Updates submitted quicker 7.6%
Digital confidence in record-keeping 4.8%
Other 0.2%

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.
  • Telephone satisfaction has generally seen an increase from last year. 
  • App satisfaction has substantially improved.
Rating  Webchat Telephone App
Poor 58.9% 49.5% 35.6%
Average 24.0% 23.7% 35.5%
Good 14.0% 20.2% 22.7%
Excellent 3.1% 6.6%  6.1%
  • Customer experience
    • Respondents reported that there was a slight improvement in the customer experience of engaging with HMRC.
    • 5.4% of respondents remarked that their customer experience had improved in the last 12 months. This response was given by 4.3% of agents and 5.7% of businesses. 
    • 57.6% of respondents said that it had ‘stayed the same’. This response was given by 29.7% of agents and 66.3% of businesses. 
    • 37.1% said it had ‘worsened’. This response was given by 66% of agents and 28.1% of businesses. 
  • Legislative burden and impact
    • 57.4% of respondents said that the legislative burden for tax compliance had worsened during the last 12 months.
    • 41% felt that it had stayed the same.
    • 1.7% thought it had improved.
  • Helpline response times
    • 55.5% of respondents said that response times on HMRC helplines were poor. 
    • 19.8% answered that response times were bad.
    • Only 2.5% of respondents rated the response times as very good. 
  • YouTube
    • 31.6% of the survey's respondents had watched any of HMRC’s YouTube videos. Of those who had seen the YouTube videos:
      • 51.8% said they had found them through HMRC communications.
      • 32.4% from GOV.UK.
      • 11.6% discovered them through Google.
      • 2.0% were referred by a friend or associate.
    • On rating HMRC YouTube videos, 44.9% rated them as ‘good’ and 5.9% rated them as ‘excellent’. 
  • Business tax information and HMRC guidance
    • 36.2% of respondents who answered this question obtained information to help with business tax affairs from GOV.UK.
    • 28.6% 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-governmental contacts.
  • Usefulness of HMRC guidance
    • 35.4% felt that HMRC's guidance was helpful. 
    • 31.2% voted that guidance was average. 
    • 12.5% considered that HMRC guidance was unhelpful. 
  • Written correspondence
    • Most respondents (9.9%) answered ‘average’ when asked how easy it was to read HMRC written correspondence.
    • 7.2% answered that it was ‘easy’.
    • 4.9% that it was ‘very easy’ to read.
    • 4.6% found it ‘difficult’ and 3.1% found correspondence ‘very difficult’ to read.
  • Benefits In Kind (BIKs)
    • Of those who had previously reported Benefits In Kind using the P11D form but now payroll those benefits, 23.2% found the P11D less burdensome, compared to 10.3% who preferred the current process of Payrolling.
  • Artificial Intelligence (AI)
    • 21.5% of replies reported having used a generative AI system such as ChatGPT to seek an answer to a tax query.
    • Of those, 55.1% felt they received an answer which resolved their query. 
    • This is a significant increase in the use and confidence in generative AI from the previous year.

Payments On Account (POAs)

  • Only 55.4% of respondents were aware of POAs.
    • Of these, 59% had experience using POAs, and the majority had a negative opinion of them.
    • 54.6% believed that HMRC should reform them, most commonly around cash flow concerns. 

Time To Pay (TTP)

  • Only 37.9% of respondents were aware of HMRC's Time To Pay (TTP) arrangements, while 62.1% were not. 
  • 34.4% had experience of using TTP arrangements, an increase of 6% from last year.
  • 11.8% of total respondents had used an online TTP self-service, an increase of 9.4% from last year.
  • Of those that had not used self-service TTP:
    • 36.2% preferred to speak to an operative.
    • 27.2% were not aware of the service.
    • 20% tried to use the service but did not meet the criteria.

Personal and Business Tax Accounts

  • 65.8% of respondents who answered this question stated that they had used the Business Tax Account (52.9% in the previous year), with 70.7% having used the Personal Tax Account (63.6% in the previous year).
  • Most respondents reported no effect on business tax administration burden from the use of either service. 

Off-Payroll Working (IR35)

  • 6.4% of respondents said that they used the Check Employment Status for Tax (CEST) tool.
    • 64.7% of respondents who had used CEST found it helpful and 35.3% did not.
  • 41.7% of respondents said that they had used the new online off-payroll working guidance. This is a significant increase from the 9.1% in the previous year.

Of those who had used the new online off-payroll working guidance, 78.9% found it not useful to use. 19.7% found it difficult or very difficult to use (note: respondents could select multiple responses to this question):

Rating Percentage of responses As percentage of section
Very difficult to use 4.1% 4.4%
Difficult to use 14.4% 15.3%
Neither easy nor difficult 44.5% 47.4%
Easy to use 24.7% 26.3%
Very easy to use 6.2% 6.6%
     
Useful to use 2.7% 21.1%
Not useful to use 10.3% 78.9%

Basis Period Reform

  • 91.9% of respondents said that they were aware of the changes proposed to Basis Period Reform to some degree, with 60.6% saying they were very aware. 
  • 11.2% believed the change would result in an improvement in business taxation and reduce business compliance costs in the long term.
    • 67.5% answered no, and 21.3% were unsure.

Working from home and nomadic workers

When asked whether they have employees Working from home or nomadic workers, 48.1% of respondents answered ‘yes’ to having employees working from home and 7% had nomadic workers.

  • 70.7% of those answering 'yes' were familiar with HMRC's working-from-home guidance. This is a significant increase from the 58.8% answering 'yes' in the previous year. 
    • Of those who were familiar, 76.6% found the guidance easy to follow.
  • 40.6% of those answering 'yes' were familiar with HMRC's nomadic workers guidance. This is also a significant increase from the 24% answering 'yes' in the previous year. 
    • Of those who were familiar, 60.9% found the guidance easy to follow.
  • The majority of respondents (62.3% of working-from-home respondents and 55.9% of nomadic worker 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)? When will MTD for Income Tax become mandatory? 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 software is available for MTD for Income Tax? What's the most suitable software I can use? Which software does HMRC list as working for MTD for Income Tax? What to consider before choosing software? 

Time to Pay agreement
Businesses and self-employed taxpayers with outstanding tax liabilities may be eligible for support with their tax affairs through HMRC’s Time To Pay service.

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 2024 to 2025