September 2016 sees the introduction of a new scheme to tackle tax payment errors. In an attempt to reduce the number of late and missed payments, HMRC will now send out text messages to remind, prompt and warn taxpayers when their payment is upcoming. But after reports of the service being trialled, not everyone supports the idea.
Read on for all you need to know about the new service.
Three-part warning
Text messages will be sent to taxpayers leading up to deadlines. With three separate alerts, the service is supposed to help them get their payment in on time. Firstly, standard’ messages will be sent out to tell the taxpayer what they owe and how to pay it. Following this, a monitoring’ message will inform the recipient that HMRC will be monitoring the debt payment. Finally, penalties’ messages prompt a payment by highlighting the possibility of a missed payment penalty.
Tried & tested
To trial the service, HMRC sent the messages out to 13,000 participants. They were self-assessment tax-payers, as this will be the target market of the service when it’s launched. The results were presented in a report by the government’s Behavioural Insights Team:
- Standard messages increased payments by just 2.3%
- Monitoring messages saw in increase of 3.8%
- Finally, the penalty message resulted in a 7% boost in payments
While this might not seem like a great amount on its own, it’s actually hugely cost-effective. Setting up a text message service takes very little time. Once this is done, it’s quick, easy and cheap to send out texts to taxpayers. With all this taken into account, it’s a great idea and it could save HMRC a lot of time and money chasing payments by other means.
Don’t be late
Focusing solely on taxpayers who had previously been late, the stats are even more impressive. A separate message was sent to these participants, reminding them that they had previously missed the deadline. It seems to have gone down very well, with an increase of 50%. It looks set to further increase HMRC’s running total of over £200 million gained through so called nudge tactics’.
It’s not all fun and games, though. The scheme has drawn criticism for its potential to cause unneeded stress. A quick look at the media reports sees the messages being depicted as threatening’. Some people seem to think by sending out these messages, HMRC will make people needlessly alarmed. Given the nature of HMRC as a government institution, it is possible.
Do you struggle to remember all the payment deadlines?
Think you’ll be constantly receiving text message reminders from HMRC? Don’t worry, we can help. UWM is a friendly team of accountants who are here to make your life easier. We provide assistance with personal tax as well as business planning, bookkeeping and payroll services, and cloud accounting. Our finance expertise is exactly what you need to get your finances organised. For more information, get in touch online, or call us on 0113 231 0202.
