The Administrative Burdens Advisory Board has released 'Tell ABAB report 2022 to 2023', which shows that businesses are finding compliance with Off-Payroll Working rules and Making Tax Digital is an increasing burden and they have seen no benefits from digitalisation.

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 almost 7,500 responses up from 3,000 last year. The primary findings were:

  • Increased administrative burdens from:
  • Businesses state that they have not witnessed the benefits of digitalisation yet.
  • HMRC communications:
    • Many respondents rated the ease of understanding HMRC's written correspondence and the information on YouTube videos highly.
    • Whilst there are still problematic HMRC forms, the numbers here are relatively low and although there are remaining frustrations with GOV.UK, these are also relatively low.
    • Respondents continue to express a strong desire to speak to a human advisor.
      • Satisfaction levels on response times for telephone calls remain low, with respondents being dissatisfied with this service for that reason.
  • When asked whether the legislative burden of Tax compliance had changed during the last 12 months, of those that answered the question (75.3%) only 2.1% of respondents remarked that it had improved. A more substantial 46.5% said it had got worse. 51.2% of respondents remarked that it had stayed the same.

Making Tax Digital

All VAT-registered businesses need to keep VAT records digitally and file their VAT returns using MTD-compatible software. Of the respondents who are businesses, 75% were VAT registered.

  • Of these businesses, 55.8% said that they had been required to move to MTD software for Record-keeping and return submissions.
  • When asked how these businesses found out about MTD:
    • 41.5% had become aware through an HMRC letter.
    • 12.2% found out through GOV.UK.
    • 22.8% found out from their agent.

On average, businesses indicated a broadly neutral response to their experience of MTD. 18.8% gave an answer of ‘very positive’ or ‘slightly positive’ to MTD. Only 9.9% felt that using software for MTD was 'difficult'.

Business responses to MTD impact

ImpactMTD effect on cost (%)MTD effect on time (%)
Increased significantly 11.6% 9.5%
Increased slightly 22.9% 14.8%
No significant effects 26.0% 25.3%
Reduced slightly 2.5% 8.7%
Reduced significantly 0.7% 4.2%
Did not answer 36.4%

37.4%


Overall, for businesses that are VAT registered, the great majority of respondents felt that they were ‘prepared’ for MTD:

  • 62.8% said they were ‘prepared’ and ‘somewhat prepared’.
  • 25.1% said that they were ‘very prepared’.
  • 16.1% said they felt unprepared. 

On the question of costs and time, over a third said there were some increases in costs while nearly a quarter said there was an increase in time spent on MTD. 

What benefits has moving to MTD brought to your business?

  Count of responsesAs % of totalAs % of answered
Other 848 23.4% 41.5%
VAT returns submitted more quickly 763 21.0% 37.3%
Up-to-date picture of the business finances 154 4.2% 7.5%
Digital confidence in record keeping 146 4.0% 7.1%
More accurate records 132 3.6% 6.5%
Did not answer 1,583 43.7%  
Total answered 2,043 56.3%  
Total respondents 3,626    

 

Off-Payroll Working

The following proportions refer only to businesses that had experience of Off-Payroll Working as either an employer, a self-employed worker or an agent or payroll company and what effect the rules had on both their admin burden and the fees that they charge.

  • 90.1% experienced an increase in admin burden, compared to only 3.4% seeing a reduction in burden.
  • Fees also went up, with 65.3% increasing their fees either ‘significantly’ or ‘slightly’.
  • 46.4% saw more reports of lost work as a result of the rules whilst 16.5% said no work was lost.

As a result of Off-Payroll Working has your company or your employer, if you were previously self-employed, required contractors to come onto the payroll as a condition of their work?

 

Count of responses

As % of total

As % of answered

Yes 239 30.8% 54.0%
No 204 26.3% 46.0%
Did not answer 333 42.9%
Total answered 443 57.1%
Total respondents 776


Basis Period Reform

The Basis Period Reform questions were only asked to the 13% of respondents who declared that they were agents. While 92.8% of agents said that they were ‘aware’ to some degree of the changes proposed, with 43.1% saying they were ‘very aware, frighteningly, some 7% said that they were ‘not aware’.

  • 44.9% of agents said they were prepared to advise clients on the impact of the Basis Period Reform.
  • 19% answered that they were not prepared.
  • 36.1% of agents did not answer the question.

When asked about their interactions with clients:

  • 16.6% of agents said that they had helped clients Change to the tax year basis.
  • 9.7% answered that they were spreading client work on a basis period throughout the transition year.
  • A further 24.1% answered that they were ‘somewhat’ spreading work through the year.

Would Basis Period Reform result in an improvement to taxation and business compliance costs, respondents said:

  • 32.3% voted ‘No’.
  • 11% voted ‘Yes’.
  • 33.3% of agents said they were identifying clients who had overlap relief to use, with a further 19.7% saying that they had not done this yet (but were potentially planning to).

Time To Pay

The survey explored the help available through HMRC’s Time To Pay (TTP) arrangement, which allows extra time to pay tax bills if the taxpayer is unable to make payment in full by the deadline date.

  • 35.5% of respondents were aware of HMRC’s TTP arrangements.
  • 63.1% were not aware of HMRC’s TTP arrangements.
  • 12.1% of respondents had experience of using the TTP arrangements.
    • Of these, VAT was the most common tax amongst TTP users, with 35% of respondents.
    • Self-Assessment with 31.3%.
    • Corporation Tax 14.3%.
    • PAYE 11.4%.

HMRC communications and engagement

  • Customer experience
    • 5.4% of respondents remarked that their customer experience when engaging with HMRC had improved in the last 12 months.
    • 61.0% of respondents said that it had ‘stayed the same’
    • 33.5% who said it had ‘worsened’.
  • Webchat and telephony
    • 25.3% of respondents rated the webchat and telephony helpline service as ‘good’
    • 7.0% rated it as ‘excellent’.
    • 39.8% of respondents said that it was ‘poor’
    • 27.8% remarked that it was ‘average’.
  • Helpline response times
    • 42.9% of respondents said that response times on HMRC helplines were poor
    • 20.5% answered that they were bad.
    • Only 7.4% of respondents rated the response times as very good. 
  • YouTube
    • 33.5% of the survey's respondents had watched any of HMRC’s YouTube videos. Of the proportion that had seen the YouTube videos:
    • 50.5% said they had found them through HMRC communications.
    • 30.6% from GOV.UK.
    • 10.5% discovered them through Google.
    • 1.5% were referred by a friend or associate.

On rating HMRC YouTube videos, 47.4% rated them as ‘good’ and 5.6% rated them as ‘excellent’. 

  • Obtaining guidance from HMRC
    • 46.3% of respondents who answered this question obtained information to help with business tax affairs from GOV.UK.
    • 40.0% get 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.
  • Suggested improvements to letters
    • The most common suggestion was for letters to be written in plain English or layman’s terms.
    • Frustration at HMRC letters demanding Tax Returns and Corporation Tax demands after they had already done so.
    • Other respondents requested that HMRC send fewer letters, and others referred to long response times to receive an expected letter.
  • Written correspondence
    • Most respondents (39.6%) answered ‘average’ when asked how easy it was to read HMRC written correspondence.
    • 36.1% answered that it was ‘easy’.
    • 14.9% that it was ‘very easy’ to read.
    • 6.8% who found it ‘difficult’ and 2.7% who found correspondence ‘very difficult’ to read.

Working from home and nomadic workers

When asked whether they worked from home, or have employees working from home or nomadic workers, 63.2% of respondents answered ‘Yes’.

  • 59.5% of those answering Yes were familiar with HMRC’s Working-from-home guidance.
  • Of those who were familiar, 54.6% found the guidance easy to follow.
  • 55.4% of Working-from-home respondents said there had been ‘no effect’ on their business.
  • 28.8% of working-from-home respondents remarked a greater admin burden

Simplifying forms

To help inform our work with HMRC on reducing costs and burdens to businesses, we asked for views on which HMRC forms were often problematic. The forms most commonly referred to in the survey are:

  • Corporation Tax.
  • VAT Return.
  • VAT Registration.
  • Form 64-8, which authorises an agent to act on a business’s behalf when dealing with HMRC.

Customs importing and exporting

The administration associated with importing and exporting from the UK has changed and 62.3% said that this has ‘increased considerably and continues to be a burden on their business’. 

Survey details

Of the responses, 86.9% came from businesses and 12.7% from tax agents. This represents a significant shift from 2022 when 67.8% of responses were from businesses and 32.2% from agents.

The highest proportion of respondents declared a turnover of less than £85,000. This was also the case in the 2022 survey. Last year however, 24% of respondents reported turnover of over £2 million, a much higher proportion than the 7.4% seen in this survey.

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 can I use? How do a file a Self Assessment tax return under Making Tax Digital?

IR35: Off-Payroll Working
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?

Accounting periods and tax basis periods
Which date do I choose? Does it matter? Can I change my accounting date?  What changes are made as the result of basis period reform?

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?

Working from home (self-employed)
What expenses can you claim for working from home, if you are self-employed? Are there special rules and precedents for certain types of trade or profession?

External links

Corporate report: Tell ABAB report 2022 to 2023Corporate report: Tell ABAB report 2022 to 2023

 


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