How not to lose to HMRC
How not to lose to HMRC
Quietly, without announcement, HMRC changed its charter in early 2016 to give itself more flexibility and latitude.

By Ross Martin, Accountancy Director at Hive Business.

Quietly, without announcement, HMRC changed its charter in early 2016 to give itself more flexibility and latitude. The number of its obligations went down by two while taxpayer obligations jumped up by five. There also came a subtle change to one of its strategic objectives, moving from “helping you pay the right amount of tax” to “maximising revenues”.

It was part of a trend that can be traced back to 2010 when something called the Behavioral Insights Team (BIT) was set up in the Cabinet Office to alter the way people act. It’s run by behavioral psychologists who devise nudge tactics. One is to stick handwritten Post-Its on correspondence with taxpayers to try to unnerve and pressurize them into abandoning their dispute with HMRC and pay additional tax. HMRC has confirmed it doesn’t record their content, which seems very strange.

The theory is that human behaviour can be influenced by many things, such as a desire to conform, shame, vanity and gentle, but consistent, prompting or nudging. And no doubt it’s right; BIT has run more than 300 trials and its recommendations are based on empirical evidence. It doesn’t just work for HMRC, it was incorporated in 2013 and helps public service organisations all over the world change human behavior, and it’s doing quite well — it posted a turnover of £7.7m in 2016.

BIT states its work is about “enabling people to make better choices for themselves” but there is something chilling about the academic publications it posts, with titles such as The Use of Descriptive Norms in Public Administration: A Panacea for Improving Citizen Behaviours? I suppose my unease stems from the creeping Orwellian-ness of it all. Fine if a private company wants to sell behavioural manipulation techniques to its clients, but I don’t think it’s OK for HMRC to abandon its integrity and impartiality so flagrantly. And I don’t believe it will pay dividends for the Treasury or the public in the end because underhand tactics can only erode trust.

When what’s needed is compassionate relationship building HMRC suddenly wants to play the quick and dirty game. Just imagine if you were halfway through a legitimate tax dispute and received one of those brown letters just before Christmas (this really happens). You might pay the amount demanded even though it might be the wrong amount by a long way (this really happens). But don’t worry, HMRC might send you a bunch of taxpayer funded flowers to say sorry next year (yes, this happens too). Feels wrong doesn’t it?

My instinct is that in a few years tactics that violate the line between private individuals and public bodies will be seen to be counterproductive and accepted as having alienated taxpayers. After all, what worked for the double glazing salesman 20 years ago is now not just redundant, it’s loathed. People are sick of PPI cold calls and they understand what the car salesman trying to hoodwink them with lower monthly payments over 42 months instead of 36 is doing.

Of course, taxation is a vital function of any healthy society, but wouldn’t it be healthier to drop the mind games and instead build trust through integrity and transparency (and maybe even efficient customer service)? My guess is that rationality beats emotion in the end: despite the short term behavioural influencing tactics of HMRC we’re not as stupid as we seem — and they will end up having to change their ways, not us.

If you think you are paying too much tax, call us on 01872 300232 or email us at

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Ross Martin Management Consultant
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