08 Oct 2019 12:18 PM

A report from HMRC looking at why small businesses contact them directly, rather than online, throws a spotlight on some interesting interplay between practical and emotional factors at work when dealing with tax issues.

Based on research carried out in 2018 but only just published, HMRC explored why people contacted its helpline about VAT or corporation tax, rather than using its website resources and online accounts. The small businesses included in the focus groups and interviews behind the report expressed a belief that HMRC didn’t really understand how they operate, or the pressures involved, and its online systems made managing their tax affairs an additional burden.

The findings show that many small businesses feel their tax affairs require more expertise than they have, coupled with anxieties around falling foul of HMRC’s penalties regime. Direct contact was generally related to:

  • confirming receipt of payments;
  • trying to understand complex terms and explanations; and
  • checking expenses.

They often felt that they needed to explain their circumstances to a person to avoid penalty charges, which was both time-consuming and frustrating.

While some admitted that their own internal systems were not always as organised or up to date as they could be, such feelings are exacerbated by HMRC’s online systems failing to send confirmations or updates on payments, submission deadlines or ongoing investigations. The advent of Making Tax Digital, where the portal does not issue confirmation statements, is expected to add to the dissatisfaction.

Even those who used their Business Tax Account, of which there was limited awareness, found it difficult to find what they needed and still believed they should contact HMRC if they missed a payment. Online resources were not easy to track down and there was a lack of clarity generally on the status of ongoing cases or queries.

The general feeling that emerges from the study is that small business taxpayers can feel intimidated by some tax complexities. They often assume that they will be accused of, and penalised for, deliberately attempting to avoid tax if they make a mistake.

The recommendations for improvement, aimed at increasing the numbers of those self-serving their tax interactions with HMRC, include:

  • simplifying the user experience online;
  • reviewing language used in customer communications across HMRC’s channels; and
  • re-framing the relationship between the customer and HMRC to clarify obligations and outcomes.

If any of this sounds familiar, it may help to know that you are not alone. There are resources to help and we are of course happy to discuss any areas of doubt.