Department indicates its intent to work with industry partners to ensure greater effectiveness for software tool that is intended to use targeted reminders to help taxpayers manage their affairs correctly
Commercial software partners have cited the “need for educating customers” as HM Revenue and Customs expands the use of a ‘nudge’ feature intended to help users better manage their tax affairs.
The HMRC Assist tool “is a service which provides data-driven nudges through third-party tax software, to support customers in providing accurate submissions first time”, according to recent transparency documents published by the department’s Strategic Software Forum (SSF).
The data release – which contains the minutes of the most recent meeting of the SSF, through which HMRC collaborates with and seeks feedback from tax software companies – states that, as of December, Assist “is currently ready to use in the Making Tax Digital Income Tax Self-Assessment beta service”.
The Making Tax Digital (MTD) programme is this year being extended to income tax returns for the first time. An initial tranche of 780,000 taxpayers – only 30,000 of whom are currently registered – will be required to begin keeping records and filing returns via MTD from April.
HMRC has opted against creating its own front-end software, with the digital tax regime requiring users, or agents operating on their behalf, to use one a of range of accredited commercial platforms – some of which are available to use for free.
The Assist function will be extended to the longer-standing MTD for VAT system in 2027. The following year, HMRC plans to introduce the nudge tool to the planned MTD for Corporation Tax regime – which has yet to receive a definitive implementation date.
Related content
- Budget 2025: HMRC given £59m tech for digital prompts and e-invoicing
- HMRC reveals digital exclusion exemption for MTD for Income Tax
- HMRC takes recent tech contract spend over £1bn with ‘new build’ services deal for Making Tax Digital
During the recent meeting of the SSF – which features representatives from HMRC and 13 companies or industry bodies – the department told its key software partners that it “wishes to support members to implement HMRC Assist in their products, and continue co-creation work on HMRC Assist for VAT”. Following the gathering, attendees were encouraged to send feedback to a dedicated email address.
“Members acknowledged HMRC Assist as a positive initial step, noting that the service provides customers with additional reassurance,” the minutes say. “Members asked HMRC to share problem statements with stakeholders and expressed interest in collaboration to find the most effective solutions. Members also noted that HMRC Assist should allow for the language and display to be tailored to the needs and expertise of software users to avoid causing frustration. To improve effectiveness, members suggested the possibility of software providers contextually rephrasing guidance. Members suggested associating an ‘error code’ with each nudge to support this.”
At a previous meeting of the SSF, HMRC claimed that a trial of digital nudges reminding taxpayers of how to correctly classify their business expenses generated an additional £27m of income for the Exchequer.
The industry representatives encouraged the department that it could do more to help bring potential users up to speed on the benefits of the tool – and to allay any fears they might have.
“Members emphasised the need for educating customers about HMRC Assist, to build trust,” the transparency document adds. “Some customers may be concerned about sharing their data with HMRC, and as a result be unwilling to opt-in to data-driven nudges. Members noted that access to data and guidance may be valuable if delivered in real-time. A desire was expressed to move compliance efforts even further upstream and earlier in the customer journey.”
The minutes stress that Assist “is aligned with HMRC’s Transformation Roadmap, which notes [the] introduction of nudges to improve compliance”. The tool is also intended to work in concert with features offered by the MTD’s commercial software partners.
“HMRC Assist complements ‘in-product’ nudges, leveraging HMRC’s data and analytics to provide tailored support,” the meeting summary says. “The service allows HMRC to continuously evaluate and update the customer messaging without impacting the software products.”
