HMRC Nudges Self-Assessors to Comply

February 21, 2012 Categories: Tax

Last month saw businesses up and down the country scramble to complete their tax self assessment return forms on time in order to avoid paying a fine.  While the government realises that nobody wants to pay the fine, they actually tried to use a rather cunning method to ensure that as many people as possible avoided the penalty.

One standard HMRC letter urged people to pay their tax return on time, and another spoke of how “nine out of 10 people in Britain pay their tax on time”, as well as claiming that most people in the reader’s local area, or postcode, had in fact paid their tax already.   Interestingly, the government released results last week explaining that there was a 15% better response rate to the latter request.

This isn’t the first time that the government has trialled “nudge” tactics, as their Behavioural Insights Team has experimented with response rates on matters ranging from personalised texts to people who owe money to the court to letters including photographs of untaxed vehicles demanding payment.

What is particularly interesting in this development is that it shows the continuing evolution of how the HMRC wants to interact with its customers.  Time was, that a gruff letter would be all the communication one would receive before a follow-up either threatening a fine or delivering one.  Indeed, it seemed to be that the only people who could really get to grips with the HMRC’s labyrinthine system were those qualified to do so: accountants.

Traditionally the HMC were considered to give a very poor service to those who needed to fill in self-assessment claims forms.  Often, because of customer services systems that weren’t congruent they appeared unhelpful and regularly seemed short of people, an impression that was backed up by the closure of several drop-in centres and a phone line that was almost always busy.

Clearly the HMRC is experimenting with the idea that in order to receive more self-assessments completed on time they need to appear more customer friendly and helpful.  Although there’s no less emphasis on the “stick” these days – penalties are always available – the tone of their communications now seems to be more persuasive.

Tactics such as those proposed by the Behavioural Insights Team have not only suggested a more effective way of influencing individuals to complete their self-assessment, but also create a more pleasant experience when doing so.  And for that at least, they should be applauded. “