Customer Benefits of the Tax Administration Strategy Reforms: Executive Summary
Published 27 May 2025
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1. Research context and design
HM Revenue and Customs (HMRC) and HM Treasury’s Tax Administration Strategy (TAS) sets out a 10 year vision to build an effective and resilient tax system, modernising current systems to ensure customers can easily calculate and pay the right amount of tax.
The purpose of this research was to capture customer perceptions of these reforms and identify customer benefits. The research focused on small businesses (0 to 49 employees) and involved qualitative and quantitative research methods, undertaken in 2 stages. The research findings will inform the direction of the TAS.
2. Experiences of tax administration
Small businesses tended to conduct tax administration in a variety of ways, often depending on the size of the business and the complexity of their tax affairs. In the survey, 64% of small businesses felt that dealing with their tax affairs was easy. However, businesses also described various challenges with the current system, linked to difficulty in navigating systems and a perceived lack of support from HMRC.
Four factors contributed to better experiences: digitalisation that reduced the tax administration burden, use of third-party software, use of agents, and experiences of supportive and effective HMRC staff. More than three-quarters of all small businesses (78%) thought HMRC was a trustworthy organisation. Where there were lower levels of trust, this was due to negative customer experience.
3. Reactions to the Tax Administration Strategy reforms and emerging customer types
Six factors tended to drive the response to the Tax Administration Strategy reforms:
- the level of change the reforms would mean for the business
- the level of trust in HMRC (both as an organisation and to implement the reforms effectively)
- businesses’ approach to organisation of tax administration
- complexity of tax circumstances
- attitude to data privacy
- digital confidence
A typology of customers comprising 4 groups was established, based on their level of trust in HMRC and their perception of the degree of change needed to adapt to them. There were different views among the groups on how beneficial the reforms would be to the business, and in the benefits identified by each group. The 4 groups identified were:
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prepared (24% of small businesses): small businesses that would need to make few changes to their tax administration approach to meet the requirements of the Tax Administration Strategy reforms and had higher levels of trust in HMRC to implement changes effectively
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amenable (54% of small businesses): small businesses that would have to make a range of changes to their approach to tax administration but were amenable to the Tax Administration Strategy reforms because they saw benefits for their business and had higher levels of trust in HMRC
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unmotivated (16% of small businesses): small businesses that were not motivated to make changes to meet the requirements of the Tax Administration Strategy reforms because they anticipated such changes would be substantial and had lower levels of trust in HMRC to action reforms well
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sceptical (6% of small businesses): small businesses that were sceptical about the Tax Administration Strategy reforms because they doubted the reforms would benefit them, even though it would commonly mean needing to implement fewer changes to their current approach to tax administration
Preparedness for the reforms ranged according to businesses’ current approaches to tax administration, agent use and digital confidence. Around half of businesses (48%) were confident they were ready for the reforms. Supporting businesses through the transition would require collaboration, good communication and provision of information, alongside technical support.
4. Customer perceptions of the Tax Administration Strategy reforms
Overall, the benefits of the reforms described by small businesses fell into 3 key categories:
- increased financial oversight and transparency
- increased ease and reduced time spent on tax administration
- offering greater reassurance that tax administration is done correctly
The concerns raised tended to centre around perceptions of a lack of control, flexibility, or clarity. Businesses were, understandably, concerned about any changes that might increase their costs.
The Single Customer Account and data pre-population reforms were viewed most positively. Almost six in ten (57%) thought the Single Customer Account would be beneficial to their business, and a similar proportion (58%) felt that HMRC using the data held on their business to pre-populate and automatically fill in relevant information in forms would be beneficial.
There were mixed views about the proposed changes for agents, increased flexibility in making tax payments, extending Making Tax Digital, and better use of real time information. Perceptions of the benefits and downsides varied according to the groups identified in the customer typology.
Three in ten (31%) small businesses could see some benefit to HMRC using data supplied by third parties to automate tax processes, but this reform raised the most concern. Businesses commonly felt this could be invasive and worried about HMRC’s ability to accurately take tax directly from sales, particularly where businesses did not understand how this would work in practice.