Research and analysis

Taxpayer experience of the HMRC repayments process

Published 29 September 2022

HM Revenue and Customs (HMRC) Research Report 670.

Research conducted by Kantar between March and May 2022. The findings in this report reflect the attitudes of participants at the time it was conducted. Prepared by Kantar (Matthew Holt, Asma Ali Farah, Emily Fu) for HMRC.

Disclaimer: The views in this report are the authors’ own and do not necessarily reflect those of HMRC.

1. Glossary

Bankers Automated Clearing Systems / BACS	An electronic transfer of funds between banks
Government Gateway / GG	An IT system that is used to sign up for online services of the UK government
P800 repayment notification	A letter notifying a taxpayer that the wrong amount of tax has been paid. It provides a breakdown of tax owe and tax paid and is only issued if too much or too little tax has been paid. It can be sent via post or via email.
Payable Order / PO	An HMRC-issued cheque that is sent to a taxpayer 21 days after notification that a tax repayment is due if alternative electronic payment methods are not utilised or unavailable. A PO is sent to a taxpayer who makes an in-year claim (i.e. payment for the current tax year) or to a taxpayer who makes a deferred claim (i.e. payment for a previous tax year)
Pay As You Earn / PAYE	Income Tax that is deducted from a salary; this is how most employees pay Income Tax
Personal Tax Account / PTA	An electronic government portal that allows individuals to track their tax records
Self Assessment	A way of reporting income and paying tax to HMRC; it is usually for people and businesses who have income that cannot be automatically deducted from wages, pensions and savings
Self-claim form	A form that is used to generate a repayment from HMRC, such as Income Tax overpayments, expenses and pension-related taxes
Tax code	A code to describe to employers how much tax to deduct for an employee paid under the PAYE scheme

2. Executive summary

2.1 Background, purpose and method

Each year, HM Revenue and Customs (HMRC) issues a high volume of P800 tax overpayment notices to taxpayers. Taxpayers can request repayment via Bankers Automated Clearing System (BACS) through their online Personal Tax Account, however, only a minority do so. Instead, most taxpayers wait to receive a payable order by post from HMRC, which is costly for HMRC and generates a high level of telephone contact from taxpayers.

Instead, HMRC would like to direct taxpayers to online BACS and other modern repayment methods and, at the same time, to improve the taxpayer experience of the repayments process. As a result, HMRC commissioned research to collect taxpayer feedback to inform these aims. The research was framed by 4 primary research objectives:

1. To understand the experience of the current repayments journey for different types of taxpayers

2. To explore taxpayer views about what a better repayments taxpayer experience could look like

3. To understand how taxpayers respond to proposed transformational solutions

4. To understand how taxpayers want to be communicated with and supported to maximise positive engagement with potential new repayments processes and services

The main stage of the research consisted of 40 online and tele-depth interviews, including 16 BACS recipients, 21 payable order recipients and 3 taxpayers who had submitted a self-claim form. Participants were purposively selected to take part in the one-to-one interviews, and the final sample contained a mix of genders, ages, repayment amounts and P800 notification methods. Findings were analysed using a framework for understanding behaviour, the COM-B model. This model frames a person’s capability, opportunity and motivation as either barriers or facilitators to a particular behaviour (Keyworth et al., 2020).

2.2 Repayment journeys

Repayment journeys varied depending on the type of taxpayer, as defined by their approach to financial management, their knowledge of tax affairs as well as their digital confidence and access. The main barriers to claiming their repayment via online BACS were as follows:

• taxpayers with low digital confidence, limited knowledge of tax affairs and poor digital access faced capability barriers such as low awareness of the repayment process, motivational barriers including a preference for the existing process due to low trust in online services, and opportunity barriers including limited access to the internet

• knowledgeable and digitally confident taxpayers, who manage their finances and taxes regularly, faced an opportunity barrier whereby they did not always receive their repayment notification

• digitally confident taxpayers without a thorough knowledge of tax affairs lacked motivation to persevere with the sign-up or the authentication process if they encountered any difficulties such as username and password retrieval and not having the right documents for verification

• taxpayers with limited knowledge and experience of tax affairs did not always read their repayment notification thoroughly, did not engage with the detail of the letter, and often misunderstood the key messages

In contrast, the main facilitators to taxpayers claiming their repayment via online BACS included:

• digitally confident taxpayers tended to automatically opt to claim their repayment via the Personal Tax Account and those who were also knowledgeable about tax affairs found the Personal Tax Account set-up or sign-in process to be simple, straight-forward and in line with their expectations

• taxpayers who had successfully claimed via Personal Tax Account previously, and had not experienced any issues, were happy to do so again, and taxpayers who had been told about the option to claim online by a colleague or family member were likely to use a Personal Tax Account to claim

2.3 Suggestions for improvement to current repayments process

Whilst there was overall high satisfaction with the process, participants detailed 2 main suggestions for improvements to the repayments journey:

• participants were keen to see fewer steps in the repayments process and wanted to do as little as possible to receive the money, while maintaining security and feelings of trust in HMRC

• participants wanted to see simplification of the verification process, or at minimum, advance information about which documents would be required to set up a Personal Tax Account and how long it should take

2.4 Transformational solutions

Across the repayment groups and proposed solutions, participants had a desire for automation where possible, highlighted the importance of transparency, and strongly preferred a lump sum over a staggered payment. Specific feedback is presented below, and the solutions have been ordered by participant preference:

1. Authorising payment through a banking app: For more digitally confident taxpayers, the idea of using their own banking app aligned with their current behaviour and comfort authorising payments for other services. Participants liked the idea of avoiding the need to remember passwords and usernames, instead utilising the app’s facial recognition and touch ID features.

2. Paying into salary account: This was a popular option among current PAYE taxpayers, who overall regarded it as a simple way to receive a repayment. Financially inexperienced taxpayers tended to like this option and see the money as a bonus, and felt like this was sensible as their salary bank account was usually their main account.

3. Changes to tax codes: This was the least preferred option across the sample, and the least understood. Participants either tolerated the idea or else were not comfortable with the perceived lack of transparency and the ability for HMRC to make further errors.

2.5 Communication and support

Overall, participants did not want a great deal of communication from HMRC during the repayments process. They were generally quite satisfied with the level and format of communications that they had received, with the exception of those who did not receive their repayment notification or had issues with their repayment. Participants who felt confident engaging online with HMRC were happy for subsequent communications from HMRC to be minimal. As they expected the reclaim process via Personal Tax Account to be relatively straight forward, they did not see much need for additional points of confirmation. Participants with low confidence and digitally limited customers tended to want more communication and wanted to receive an email and a letter for each stage along the journey.

3. Introduction

3.1 Background

HMRC issues a high volume of P800 tax overpayment notices to taxpayers each year (around 3.5 million in 2021). There are 3 main ways in which Income Tax overpayment is administered. Upon receiving a repayment notification, taxpayers can request repayment via Bankers Automated Clearing System (BACS) through their online Personal Tax Account or over the phone. They can also receive a payable order by post by taking no action for a period of 21 days. Taxpayers can also choose to complete a form to receive an in-year payment, rather than wait to receive a repayment notification (these taxpayers are referred to as ‘self-claim’ repayment recipients throughout this report).

Only a minority of taxpayers request repayment via BACS through their Personal Tax Account, and taxpayers who make a claim to HMRC for a repayment of an in-year overpayment are only able to request a repayment via a payable order. Most taxpayers are waiting to receive a payable order, and some are making a BACS claim over the phone, which makes the current repayments costly for HMRC and results in a high level of telephone contact from taxpayers.

For a better taxpayer experience and to reduce administrative costs, HMRC would like to shift taxpayers away from payable orders and direct them to BACS online repayments and other modern repayment methods. To this end, HMRC has proposed some transformational solutions: payment authorisation via taxpayers’ mobile banking app, payment into salary accounts and changes to tax codes.

Kantar Public was commissioned to conduct 40 interviews with a range of repayment taxpayers to explore their views regarding the current repayments journey and proposed solutions. This research report outlines the research aims, methodology and findings from these interviews.

3.2 Research aims

The overall aim of this research was to explore taxpayers’ views about the current repayments journey, drivers of a repayment claim via BACS online and to gather feedback on HMRC’s proposed solutions. The specific research objectives were to:

1. Understand the experience of the current repayments journey for different types of taxpayers, including barriers and pain points that prevent taxpayers from taking up the Personal Tax Account option to claim their repayment and that may drive unnecessary customer service contact

2. Explore taxpayer views about what a better repayments experience could look like, considering tactical solutions and whether these would address taxpayer needs

3. Understand how taxpayers respond to proposed transformational solutions

4. Understand how taxpayers want to be communicated with and supported in order to maximise positive engagement with potential new repayments processes and services

3.3 Method

Qualitative research design

This research drew on a qualitative research methodology to gain deep and rich insights into experiences of the repayments process and to co-create new solutions. Forty one-to-one online and phone interviews were conducted that were between 45 and 60 minutes in length, taking place between the 21 March 2022 and the 3 May 2022 . One-to-one interviews allowed for an exploration of the range of experiences, needs and circumstances in sufficient detail, and the semi-structured format meant that different participants could go into detail about the stages of the journey most relevant to their experience. The interviews were conducted both online over Zoom and over the phone to improve accessibility for participants with lower digital confidence.

Sampling and recruitment

The primary sampling criteria for the research was the method of repayment. The number of interviews conducted by payment method were as follows:

• 16 interviews with taxpayers who received a repayment via a direct bank transfer (BACS), either requested via phone (3) or through accessing their Personal Tax Account (13)

• 21 interviews with taxpayers who received a repayment via payable order

• 3 interviews with taxpayers who made a claim within the same tax year as the overpayment, referred to in this report as self-claim repayment recipients

In addition, participants were purposively selected to take part in the one-to-one interviews, to ensure a diverse range of opinions, characteristics and repayment experiences as detailed below:

• an even distribution of gender

• a spread of ages across 4 brackets (18 to 29, 30 to 44, 45 to 59, 60+)

• a range of repayment amounts (less than £100, between £100 and £600 and greater than £600), repayment month (June to July 2021 or December 2021)

• whether the repayment notification was sent by letter or email

• the inclusion of some participants who contacted HMRC during the repayments process to address any queries or issues

• for payable order recipients, whether they had a Personal Tax Account or not

A full breakdown of the achieved sample can be found in Appendix B.

Recruitment was conducted with the help of HMRC records. A HMRC dataset was used to identify taxpayers that received a repayment in June to July 2021 or December 2021 and whether they were repaid via BACS (online or phone) or via payable order. An opt in or out exercise was then conducted which gave individuals in the research sample the opportunity to register their interest in taking part in the research or request not to be contacted. A participant information letter was sent to individuals in the sample including a clear description of the research, its purpose and coverage, details of named contacts at HMRC and Kantar Public and information on how to opt-in or opt-out of the research. Following participation in the interview, participants received an incentive to thank them for their time.

Behavioural analysis

Qualitative data were analysed through a behavioural lens using the COM-B model to identify the barriers and facilitators to taxpayers claiming online via BACS. COM-B is a widely used theoretical model that originates in studies of health behaviour and seeks to provide an overall model that captures all the factors that could influence behaviour (Keyworth et al., 2020). The model theorises that 6 components drive behaviour:

• physical capability (such as skills)

• psychological capability (such as comprehension and reasoning)

• physical opportunity (such as time and resources)

• social opportunity (such as interpersonal influences)

• reflective motivation (such as evaluations and plans)

• automatic motivation (such as desires)

4. Repayment journeys

Participants’ repayment journeys varied based on the communication they received from HMRC, their engagement with the process, the actions they took and the method of their repayment. This includes participants who, after receiving a repayment notification:

• claimed via BACS through their (already existing) Personal Tax Account

• set up a new Personal Tax Account to claim via BACS

• started to claim via their Personal Tax Account, but stopped and received a payable order

• contacted HMRC to claim via BACS

• did nothing, and waited for a payable order

Some participants did not receive a repayment notification, and either:

• received a payable order (which was the first time they discovered they were due a repayment) or

• proactively contacted HMRC to self-claim in year

This section explores the findings for research objectives 1 and 2, namely the facilitators of and barriers to taxpayers claiming via BACS online, as well as participant suggestions for improving the repayments process. The section begins by outlining the ideal repayment process from HMRC’s perspective and the reasons for dropping out at various stages, before introducing the 6 taxpayer profiles that emerged from the findings.

4.1 Ideal repayment journey

Table 1 below summarises the ideal repayment process and the reasons for dropping out of the process along the journey. The points at which taxpayers could drop out of the process were: receiving the repayment notification; their response to reading the repayment notification; or their attempt to sign in to or set up their Government Gateway or Personal Tax Account. There were no dropouts observed once a taxpayer had successfully set up and/or logged into their Personal Tax Account.

Taxpayer contact with HMRC was limited during the repayment process. Taxpayers only contacted HMRC once they received a payable order to verify the authenticity of the cheque, otherwise they proceeded to claim their repayment or else dropped out and waited for a payable order without further contact. Self-claim repayment recipients who contacted HMRC required help filling out the relevant form, finding the guidance from HMRC’s contact centre advisors to be helpful for them to be able to make their in-year claim.

The table below excludes self-claim repayment recipients, who had proactively contacted HMRC for a repayment before a repayment notification would have been issued.

Table 1: Ideal repayments process (BACS via Personal Tax Account) and reasons for dropping out of this process.

Steps	Repayment process	Reason for dropout
1	Receive P800 notification	Letter sent to old address, email delivered to spam folder
2	Read and understand notification	Miss the Personal Tax Account sections, do not understand what a Personal Tax Account is and ignore, put it off or choose to do nothing
3	set up Government Gateway ID, set up Personal Tax Account, use existing Personal Tax Account	Cannot retrieve Government Gateway ID details, cannot provide documentation
4	Enter bank details	No dropouts at this step
5	Receive payment

4.2 Taxpayer profiles overview

Six main taxpayer profiles emerged from the variations in repayment journeys, linked to taxpayer knowledge and experience with finances and tax affairs, their trust in online services, digital confidence and their digital access. This section provides a summary of key characteristics of each profile identified in this research and the subsequent sections explore in detail the behavioural barriers and facilitators for each profile, as well as different participant suggestions for improving the repayments process.

Table 2: Taxpayer profiles and key characteristics

Taxpayer Group	Likely repayment method	Characteristics
Proactive	BACS / self-claim	Had Personal Tax Account for tax affairs prior to receiving repayment notification, vigilant financial managers with extensive knowledge of tax and HMRC processes, digitally confident and regularly used financial management apps including online banking
Digital by default	Payable order but could also be BACS depending on motivation to complete the Personal Tax Account sign-up process	Limited knowledge of Personal Tax Account, tax affairs and of HMRC processes, young and digitally savvy, not very proactive with financial management
Low online trust	Payable order or BACS via phone	Generally distrustful of online services and processes, limited understanding of tax affairs and not confident in being able to identify online scams, or became vigilant as a result of experiencing an online scam
Digitally limited	Payable order	Limited internet connection at home due to finances or basic digital skills, no use of banking apps / online banking, unfamiliar with HMRC digital processes such as the Personal Tax Account
Capable withdrawers	Payable order	Found Personal Tax Account process cumbersome and dropped out of process, eager to understand more about tax affairs but did not consider themselves particularly knowledgeable, though generally digitally literate
Passive	Payable order	Overwhelmed by financial matters and did not consider themselves financially knowledgeable, but could use apps for the most part, viewed repayments process as HMRC’s responsibility and were unwilling to be more active in the process

4.3 Barriers to requesting repayment via BACS

While there were multiple barriers to taxpayers reclaiming by BACS, the most important reasons for not doing so were:

• not receiving the repayment notification; difficulties logging in or signing up to the Personal Tax Account

• low digital capability and fear of transacting online

• inertia and attitudes towards overpaying tax and the repayments system

These are explored in detail below, along with barriers experienced by particular taxpayer groups.

Not receiving the P800

A key opportunity barrier was that taxpayers did not always receive their repayment notification, but rather first discovered they were due a repayment when they received a payable order attached to a letter from HMRC. This experience occurred across taxpayer groups. Those in the proactive group noted that they would have preferred to have avoided repayment by cheque and would have gone online if they had known it was an option.

Even if they did receive it, taxpayers did not always read their repayment notification letter thoroughly. While knowledgeable taxpayers usually found it straightforward to understand, those in the passive group had not engaged with the detail of the letter, and often misunderstood the key messages (even during the research testing).

I just wanted it into my bank account. I think I just had to wait to get it into my bank account, whereas if you wanted it by cheque you had to contact them.

(Payable order, 18 to 29, More than £600)

Difficulties logging in or signing up to a Personal Tax Account

Another key opportunity barrier arose as taxpayers attempted to log in to their Government Gateway or to verify their identity to set up a Personal Tax Account. Capable withdrawers in particular reported lacking motivation to persevere with sign-up or the authentication process if they encountered difficulties. The most common issues encountered were username and password retrieval and not having the right documents for verification, especially among younger taxpayers or those not born in the UK. There were digital by default taxpayers who had attempted to sign up to a Personal Tax Account on their smartphone but had paused if they had been unable to log into their account immediately or once they realised there was an additional verification step. While they had intended to continue the process later on their computer or when they had more time, these participants sometimes forgot to return to it before they received a payable order.

The website was very persistent in getting me to login with something I never thought I had in the first place. If you don’t have an account, you register, which I did. I did not have everything I needed to sign up or login. It felt like I was going round in circles…. I spent 4 days trying to find the right documents and trying to login.

(Payable order, 18 to 29, £100-600)

Low digital capability and fear of transacting online

Motivation barriers to claim online could relate to a lack of trust in online processes and the security of online transactions. Those in the low online trust group in particular preferred to be paid by cheque and generally avoided online transactions. Linked to this, those with negative experiences of fraud in the past were concerned about the authenticity of the P800 notification, especially if they were unclear about the reason for the repayment. These participants felt that the arrival of a cheque would prove that the letter was genuine, preferring not to take any action that they believed could leave them vulnerable to fraud.

I wasn’t sure if it might be a scam, as they said during the lockdown scams have really gone up, so I kept the letter and waited to see if the cheque actually came through.

(Payable order, 18 to 29, More than £600)

An important capability barrier related to taxpayers’ digital access, as those without stable internet access or a device they could use were unable to create a Personal Tax Account online. This included digitally limited taxpayers, those living in rural areas and those on a low income who were unable to afford data or broadband access. Furthermore, taxpayers without a smartphone that was compatible with banking apps were not confident at transacting online. Additional capability barriers related to low digital skills, a lack of mental stamina to see the Personal Tax Account sign-up process through as well as low awareness of the repayment process.

Inertia and attitudes towards overpaying tax and the repayments system

An underlying motivation barrier to claim repayment via BACS, common among passive repayment recipients, was inertia and the existence of a default option. These participants said that on receipt of the repayment notification, once they realised that they did not owe HMRC any money, they had only skimmed the contents of the letter and seen that inaction would still result in repayment. This meant that these participants had low motivation to take action, defaulting to repayment by payable order. Inertia was compounded among participants who did not mind depositing cheques and those who were able (and aware of the facility) to deposit cheques via their banking app.

The PTA sounds complicated, just another online thing that I wouldn’t particularly need.

A cheque is easier, more straightforward.

(Payable order, 45 to 64, Under £100)

Views towards HMRC and the tax system also influenced motivation to reclaim online. Those in the proactive group felt strongly that it was not their responsibility to claim the payment, but rather HMRC’s role to correct an error. Out of principle, and frustration at being overtaxed, these participants wished to minimise the tasks they had to undertake to claim their repayment, even if minor. This view contrasted with a perception among less tax savvy participants who felt the money was an unexpected bonus, viewing the repayment system as a passive savings account. One participant had opted to wait for the payable order to avoid spending the money too quickly.

It’s HMRC’s responsibility to look after my income and tax…I shouldn’t ideally be chasing them.

(BACS Phone, 30 to 44, £100-600)

While past experience of a repayment meant that participants felt more comfortable with the process, experience could serve as a motivational barrier as repeat recipients of a repayment tended towards claiming via the same method they had used before. Those who had received a cheque were habituated to waiting for it and those who had contacted HMRC by phone were more likely to do so again to claim future repayments. This means that older participants whose previous repayment pre-dated the existence of BACS online were more likely to be used to the payable order method of repayment. This was particularly the case among older participants in the passive group.

First-time repayment recipients also face a motivational barrier to using a Personal Tax Account. These participants did not expect repayments to be recurrent, either because the tax discrepancy had been caused by a one-off event such as retirement, or because they were in steady employment and paid by PAYE. As a result, they did not think it was worth the time investment or the ‘hassle’ to set up a Personal Tax Account, as they would be unlikely to need to use it again to claim a repayment in the future.

Except for the participants in the proactive group, understanding and awareness of Personal Tax Accounts was low across the sample, including a lack of familiarity with the phrase ‘Personal Tax Account’. Participants tended not to use this language to describe their Personal Tax Account even if they had one, so did not recognise the phrase on the repayment notification letter or realise they might be able to use their existing Personal Tax Account. However, participants were more likely to be familiar with the ‘Government Gateway’ and often used this language to talk about the log-in process.

4.4 Facilitators of BACS

The primary facilitators of claiming repayments online via BACS related to the characteristics and preferences of the taxpayer.

Preference for online services

Digital by default, proactive and capable withdrawers, who were digitally capable and confident transacting online, tended to automatically opt to claim their repayment via the Personal Tax Account. Digital by default and proactive participants found the Personal Tax Account set-up or sign-in process to be simple, straightforward and in line with their expectations in terms of the time and effort involved.

It’s easy to use, doesn’t require me to be kept on hold for a long time, I can do it in my own time

(BACS Personal Tax Account, 18 to 29, More than £600)

Linked to a preference for online, another motivational facilitator driving taxpayers to claim online was a dislike of cheques and a strong preference for bank transfers. Aversion to cheques stemmed from the perceived hassle of depositing them in person in a bank, exacerbated by local bank branch closures, and the timing of the repayments being during a COVID-19 lockdown. Less commonly, participants sought to avoid cheques as they had experienced issues with their postal service since COVID-19 lockdowns.

I avoid going to the branch as much as I possibly can, I don’t like queuing and I find the instantaneous transactions…far more satisfactory

(BACS Personal Tax Account, 60+, Under £100)

Secondary facilitators of BACS

Though digital capability and aversion to payment by cheque were the most important drivers of the desired behaviour, there were several additional factors that meant taxpayers were more likely to claim online.

The fact that claiming online provided repayment recipients with their repayment sooner could be a motivational facilitator for doing so, though this depended on the amount of the repayment. For lower amounts, participants tended not to mind waiting several weeks for the money, whereas participants were more motivated to access larger sums sooner. Participants in the proactive group tended to be most motivated to claim their money quickly, for example so they could invest it, and participants on a low income were also more motivated to access the money quickly. While what constituted a large amount was difficult for participants to pinpoint, and varied for different participants, repayment amounts exceeding £600 were typically considered large enough to motivate an online claim. It should also be noted that definitions of ‘timely payments’ were quite generous in the context of HMRC. There was a broad expectation that processes will be slow, but also high trust that repayments would eventually be made and that HMRC acts fairly.

Why would you wait for a cheque?

(BACS Personal Tax Account, 60+, More than £600)

A facilitator relating to taxpayers’ capability was familiarity with the online repayment process. Participants who had successfully claimed via their Personal Tax Account previously (and had not experienced any issues), were happy to do so again, and participants who had been told about the option to claim online (by a colleague or family member) were likely to use a Personal Tax Account to claim. The exception to this was among capable withdrawers, whose frustration at their inability to sign up to a Personal Tax Account meant they were unlikely to try it again.

Participants who had claimed online via the Personal Tax Account were confident about the authenticity of the letter as a result of several contextual cues. If they received their P800 by post, they were reassured by the official HMRC letterhead and the information about the reasons for repayment being recognisably specific to them. If they received their P800 by an email notification asking them to check their Personal Tax Account, they were reassured that the message was secure as it was hosted within their secure account.

Participants were not very motivated by the idea that claiming via Personal Tax Account negated the risk that cheques might go to the wrong address. This was because the arrival of the P800 meant that HMRC already had the right address, and participants felt there was minimal risk of someone else being able to cash a cheque that was in their name.

4.5 Improvements to the process

On the whole, participants were quite satisfied with the repayment process they had experienced and, unless they had encountered a problem, did not feel that there was an urgent need to change the system. However, they suggested several minor improvements they felt would streamline the repayments process.

With the exception of those in the low online trust group, participants were keen to see fewer steps in the repayments process and wanted to do as little as possible to receive the money, while maintaining security. Participants often assumed that HMRC had customers’ bank details and would be able to process payments using this information. On reflection, participants were willing to confirm their bank details with HMRC and proposed that HMRC could suggest the bank details they thought were correct for the repayment recipient to confirm, for example by sharing the last 4 digits, avoiding the need to enter any bank details or log into a secure site. While there was an expression of discomfort with HMRC having their bank account details, participants typically had high trust in HMRC and were unconcerned about sharing this information.

They must have our bank account details on file. Just click something to say yes I’m happy to receive this payment and that’s all they had to do.

(Personal Tax Account BACS, 18 to 29, Under £100)

Should automatic repayments to taxpayers’ bank accounts not be possible, and the Personal Tax Account still be necessary to claim online, participants suggested streamlining the Personal Tax Account sign up process. Participants wanted to see simplification of the verification process, or at minimum, advance information about which documents would be required to set up a Personal Tax Account and how long it should take. Participants across groups felt the process would benefit from simplification regardless of their digital skills. Less knowledgeable participants suggested that greater clarity about what the Personal Tax Account is and prompts to help taxpayers recognise if they already have one would be helpful.

As it was so often a reason for taxpayers to give up claiming via their Personal Tax Account, participants suggested improvements to the Government Gateway log in process, such as making it easier to reset forgotten passwords. In particular, those in the proactive group and capable withdrawers sought additional forms of automation to remove barriers and reduce the hassle involved in reclaiming. They spontaneously suggested using ‘Face ID’ technology to help streamline the process and avoid the need to remember or reset Government Gateway details.

I’d be less likely to claim online if it’s a long or a hard process, if I had to fill out loads of information. It just needs to be as minimal as possible.

(Payable order, 30 to 44, Under £100)

Participants with low online trust and passive customers with low digital confidence wanted reassurance that the repayment notification was genuine, as they were being asked to enter personal details online. Though none of the participants had actually tried to ascertain whether the letter was genuine, they noted that a prompt on the notification explaining how to verify authenticity could help reassure them.

It was also important for more confident taxpayers that there was greater traceability within the repayment process, especially those with low online trust, for example, by providing an expected repayment date, as opposed to a time window, and in particular if any delays are to be expected. This would help improve the transparency of the repayment, enable taxpayers to track the status of the payment and empower them to follow up any delays or problems.

5. Transformational solutions

Three transformational solutions were tested with participants: the option to authorise payment via taxpayers’ own mobile banking apps; payment into the account in which taxpayers receive their salary; and changes to tax codes. Across the responses to the ideas, and aligned with their suggestions for improvements, participants valued automation where possible, transparency and a lump sum payment.

Automation where possible

As discussed in section 3.4, participants were supportive of changes that increased automation and minimised effort on their part, especially those who were digitally confident and capable. While participants were willing to be involved in the authorisation of the payment, they preferred that to be the extent of their involvement. Automation through PAYE or payment into salary accounts was also generally supported, though there were exceptions among participants who were uncomfortable with employer involvement.

Transparency

Across all the solutions, participants emphasised the importance of being made aware of the repayment process, the amount and the due date. It was also important that HMRC clearly explained the reasons that an overpayment occurred. Participants disliked elements of solutions that they thought could cause confusion or make it difficult for them to isolate the repayment amount, for example, changes in tax codes were considered too difficult for a lay person to understand, making it very difficult for taxpayers to interrogate HMRC’s calculations or recognise an error.

A lump sum rather than a staggered payment

Participants wanted to feel in control of the repayment money, and to be given direct access to it, rather than to receive it in smaller amounts spread across the year. Ultimately, participants wanted access to the money with minimal delay, either because they felt strongly that it was owed to them and that it was right that they had it as soon as possible (proactive), because they wanted to invest the money as soon as possible (proactive), or conversely, being low on funds and wanting the money to cover everyday expenses or debts (passive and digitally limited).

5.1 Authorisation via banking app

Out of the 3 solutions, this repayment method was universally preferred among participants with the exception of the digitally limited, who did not use mobile banking and were unlikely to be willing or able to do so. For more digitally confident participants, the idea of using their own banking app aligned with their current behaviour and comfort authorising payments for other services. They key benefit lay in the ease of logging into their existing banking app, as taxpayers often used ‘face ID’ or ‘touch ID’ fingerprint to do so, avoiding the need to remember usernames and passwords or to set up an account. For this reason, the idea of a banking app was regarded as easier and more secure than entering bank details online. The use of an established banking app provided an additional layer of trust as banking apps were regarded as secure, and participants felt that banks would also be accountable for their repayment. Further, participants felt positive about the certainty of linking the payment to their account and the ability to check for the transaction within the app.

If you’ve got an app, you can log into it once, you can use face ID to authenticate it, and you wouldn’t have to type in your details every single time, you don’t have to find the website

(Payable order, 18 to 29, £100-600)

This is the way forward, everyone’s doing it, you can do it on the bus on the train at home watching TV, it’s so much easier.

(Payable order, 30 to 44, Under £100)

Participants who were willing to use online and mobile banking, but who were less familiar with doing so regularly, still felt this was a good option and would be interested in trying it if there were clear instructions for how to do so. Participants felt that notification about the repayment reason and process would be important for this option.

5.2 Payment into salary account

This was a popular option among current PAYE participants, who on the whole regarded it as a simple way to receive a repayment. Financially inexperienced participants (passive, digital by default) tended to like this option and see the money as a bonus as opposed to being owed to them. It also felt like a sensible and appropriate choice as their salary bank account was usually their main account and they rarely if ever switched bank accounts. Proactive participants also liked simplicity and that it required minimal input from the repayment recipient. Participants felt it would be important for them to receive notification and explanation of the repayment so they were not confused or concerned by an unexpected deposit.

That’s where that money if it hadn’t been taxed would have gone into anyway.

(Payable order, 18 to 29, Less than £100)

You can’t have extra money appearing without knowing.

(Payable order, 30 to 44, £100-600)

However, participants raised some concerns about how automated payments would work in situations where a taxpayer had changed jobs or bank accounts or retired. In addition, participants on a lower income preferred to have control over which bank account the money was paid into as, if the repayment was paid into an overdrawn account, they would be unable to freely access the funds.

5.3 Changes to tax codes

This was the least preferred option across the sample. While the most tax knowledgeable participants had experience of HMRC amending their tax code to manage an overpayment or underpayment in tax in the past, which they had no issue with, the idea was not appealing as an alternative to the repayment process being discussed.

There were 2 main reasons for the unpopularity of changes to tax codes as a solution. Firstly, tax codes were not well understood by participants, even among the more financially savvy, so were regarded as an opaque way to communicate about and process a repayment. Further, though interaction with HMRC was typically rare, participants’ experiences had usually related to errors being made with tax codes. As a result, tax codes were associated with HMRC error, and could be seen as the reason the overpayment had occurred in the first place.

The more changes to the tax code system, the greater risk of something going wrong.

(Payable order, 45 to 64, Under £100)

I don’t know enough about tax codes to be able to know if it’s right or wrong.

(BACS Personal Tax Account, 18 to 29, More than £600)

Secondly, some participants expressed a wide range of concerns about the involvement of their employer. Some felt that the repayment was personal information that was not appropriate for their employer to know, or worried that it placed undue burden on the employer, especially if they were in a new job and the discrepancy was unrelated to their current employer’s actions. Participants felt that the complexity of tax codes could end up confusing their employer and lead to further errors.

I would feel a bit funny, it’s between me and HMRC, especially if it’s more money. You don’t want it to come across you’ve suddenly had this inheritance come from HMRC.

(Payable order, 30 to 44, Under £100)

Some participants were also confused about whether repayment via PAYE would mean that the repayment would be subject to tax.

Universally, participants preferred the option of receiving the money as a lump sum rather than paid across the year. This was particularly true among proactive participants who felt that the money was owed to them, though participants generally felt it was fair for the repayment to be made without delay, and for them to be in control of the money. Participants also thought that if payments were paid in instalments alongside their salary, it would be more difficult for them to check that it had all been repaid, and there was a sense that the money being mixed up with their income could lead to confusion of their usual budgeting.

I’d rather have all the money sent to me in one go so I can use it however I need to use it. If it’s money I was owed from the prior tax year I would rather have it in one go so I’m not out of pocket

(BACS Personal Tax Account, 18 to 29, More than £600)

6. Communication and support

On the whole, participants did not want a great deal of communication from HMRC during the repayments process. They were generally quite satisfied with the level and format of communications that they had received, with the exception of those who did not receive their P800 or had issues with their repayment.

Overall, participants wanted to retain a postal version of the repayment notification, as they felt they were likely to dismiss emails or texts from HMRC as fraudulent. Participants generally were happy with the level of information included in the current version of the repayment notification, though suggested a few additions to the letter, including:

• a way to check that the letter is genuine

• greater clarity about what the Personal Tax Account is

• information about how long the Personal Tax Account set up should take and what documents are required

• an alternative contact method for disabled taxpayers (see section 5.2 for more detail)

Email is tricky since usually 99% of the time it’s an email from HMRC it’s a scam.

(BACS Personal Tax Account, 45 to 64, Less than £100)

Participants differed slightly in terms of how much additional communication they wanted after the P800, based on their taxpayer group and whether they had experienced any issues in claiming their last repayment.

6.1 Confident taxpayers

In general, participants who felt confident engaging online with HMRC, specifically members of the proactive, digital by default, capable withdrawers and certain passive profiles, were happy for subsequent communications from HMRC to be minimal. As they expected the reclaim process via Personal Tax Account to be relatively straight forward, they did not see much need for additional points of confirmation.

If it’s done online it will be paid in 5 days so I don’t really need messages in those 5 days.

(Payable order, 18 to 29, More than £600)

However, less trusting participants were interested in receiving notifications at future points in the journey. In order of importance, this included:

• confirmation of the date of the payment, or likely ‘window’

• confirmation that bank details had been received and the repayment is being processed

• notification that the repayment has been made

Participants who had experienced any issues in their repayment journey, and especially those who had called HMRC or felt confused about the reason for repayment, were more likely to feel it was important for taxpayers to have a record of the information, to be able to track the repayment in case of delay.

While there was variation in channel preferences, confident taxpayers were generally comfortable with additional notifications being delivered via email or SMS, following the initial P800 by letter, as they would not require the customer to take action. Participants were also happy for messages to be delivered via the Personal Tax Account, seeing this as very secure and appropriate to the process.

Participants across ages and groups wanted the option for a live chat with HMRC in case they needed to contact them. A live chat was regarded as preferable to phoning HMRC, as wait times would be shorter.

When asked to describe their ideal repayment process, participants said that they would prefer not to need a repayment and not to have overpaid tax. To this end, some suggested that communications could include advice about how to avoid overpayments in future, linked to the reason for overpayment.

6.2 Low confidence and digitally limited taxpayers

Those with lower confidence and who did not feel confident or safe engaging online, specifically those with low online trust, digitally limited and members of the passive profiles, tended to want more communication and favoured a ‘belt and braces’ approach: they wanted to receive an email and a letter for each stage along the journey. They were also more likely to say that they would like to confirm their bank details on the phone with HMRC.

While this group was most likely to say that they wanted the option to phone HMRC for support, one participant with Asperger’s noted that he had struggled to communicate with the HMRC advisor on the phone and would have benefitted from a separate helpline catering to taxpayers with disabilities. In addition, participants who had phoned HMRC suggested that advisors could use less jargon during conversations, as they had found some of the information difficult to understand.

We are not experts on forms, they use a lot of jargon ‘the P53, it will go to SPAR team’, I don’t know what those things mean.

(Self-claim, 45 to 64, Under £100)

7. Conclusions

Across the taxpayer groups, feedback from participants fell into 3 main categories covering both the current repayments process and more transformational solutions:

• a preference for more automation of the repayment process and HMRC support

• a desire for a simplified Personal Tax Account sign up process

• clarity of the P800 notification

This section considers participants’ preferences in the context of specific taxpayer groups, as the process pain points and suggestions for improvement differed greatly by profile. It must be acknowledged that there were participants who were content with the current process of waiting for a payable order and receiving letters; these taxpayers therefore may be unlikely to be reached by the solutions explored through this research.

7.1 Automation of repayment and support

Proactive, digital by default and capable withdrawers all expressed a preference for a higher degree of automation at HMRC. Despite the overall digital capability of the groups, their high level of trust in HMRC and their motivation to receive their repayment quickly and efficiently resulted in negative feedback about their current level of involvement and their desire to have their perceived burden reduced.

In terms of the existing repayments process, this included suggestions to use online chat bots to reduce phone waiting times, and to use facial recognition features to improve the verification process for the Personal Tax Account (more on this below). All 3 customer groups preferred the banking app authorisation and salary account transformational solutions, as these were considered to be more automated and to require less involvement from the customer to receive their money. The preference for improved automation was associated with a desire for reduced communication, with these customer groups highlighting their desire to be informed of what they perceived to be the necessary stages of the repayments process: notification of repayment, reason for repayment and the date the repayment is to be expected in their accounts.

Proactive and capable withdrawers did not suggest any changes to the level of support they receive. However, digital by default customers did suggest HMRC should provide more education around tax and the role of the customer in managing tax affairs.

7.2 Simplification of the verification process

Both the digital by default and capable withdrawer groups suggested that the Government Gateway and Personal Tax Account sign up processes need to be simplified. These participants described an opportunity barrier whereby they either did not have the correct identification required, had difficulty retrieving their Government Gateway details and password, or attempted to complete the process on their phone and later forgot to return to the process on a laptop or desktop. Principally, respondents from these 2 profiles would prefer a level of automation in the verification process, including facial recognition technology. Participants felt that this would remove the barrier of remembering their login details or sourcing the required documents to be able to verify their identity.

Other than automation, participants suggested that some guidance be provided in advance of commencing the process, detailing which documents will be required as well as where they may be able to locate them. It should be noted that proactive participants reported not having any difficulties moving through the sign up and verification processes, and low online trust, digitally limited and passive participants did not get as far as attempting to engage with the process at all. Therefore, this suggestion would only impact those taxpayers who could potentially become BACS online recipients with some additional support or if the process was simplified.

7.3 Clarity of notification

Passive participants in particular either did not understand the section of the notification relating to the Personal Tax Account, or else missed it completely having read the notification backwards and having focused on their repayment amount. The letters were shown to participants in the interview itself, and even reading for a second time, passive participants either missed the green box that suggested that they get a Personal Tax Account, or else they skipped the first section of the notification entirely.

Participants with limited tax knowledge who read the first section struggled to comprehend a Personal Tax Account and expressed no desire in following up to get more information. These participants suggested that the benefits of the Personal Tax Account could be made more salient to motivate passive participants to seek their repayment via BACS online, with the main benefits being perceived as the speed of the repayment and ability to control and update their address and bank account should they change.

The term Personal Tax Account was unfamiliar to passive participants, participants with low online trust and the digitally limited, and they instead focussed on their repayment details, disregarding the sections about the Personal Tax Account and the instructions of how to set up an account.

Table 3 outlines the specific participant preferences across the 3 main research areas from different taxpayer profiles.

	HMRC processes	Transformational Solutions	Communications/support
Proactive	Reduce phone wait times with phone and online chat bots	Anything automated and received as a lump sum	Reason for repayment and expected date
Digital by default	Simplify or even automate ID verification (face recognition)	Authorise repayment through banking app	Reduce communication to a minimum
Low online trust	Enhance assurances that Personal Tax Account website is genuine and not a scam	Require education about salary repayments and role of employer	Send official letters and emails that can be authenticated
Digitally limited	Continue offering phone support for tax affairs	Keep sending payable orders	Provide ongoing phone support and send both letters and emails to make sure notifications are not missed
Capable withdrawers	Simplify or even automate ID verification	Use banking app or create app with face recognition technology	Provide education about tax code changes, but continue to send letters or emails
Passive	Make the Personal Tax Account information on repayment notification more salient	Continue sending official letters and payable orders	Provide more information about tax code changes

8. Appendices

8.1 Appendix A

Methodology

This research was conducted in partnership with HMRC’s Behavioural Insight team to conduct a behavioural diagnosis of the current repayment journey, namely why only a minority of taxpayers request repayment via BACS through their Personal Tax Account, and consider possible behaviourally informed changes to communications and the repayment process. A behavioural diagnosis workshop was conducted to generate hypotheses, drawing on the Capabilities, Opportunities, Motivations Behaviour (COM-B) behaviour change model. COM-B was used to capture the full range of influences on behaviour, such as capability, opportunity, motivation, and to unpick what can be done to affect change.

Following the generation of hypotheses, a discussion guide was developed to explore in each interview contextual factors, experiences of the repayment process, suggestions for an improved repayments journey and any improvements to HMRC communication and support. The full list of research questions that the research sought to address included:

1. Understand the experience of the current repayments journey for different types of taxpayers, including barriers and pain points that prevent taxpayers from taking up the Personal Tax Account option to claim their repayment and that may drive unnecessary customer service contact:

(a) What do different types of taxpayers understand about the repayment process?

(b) What are their overall reflections of their experiences of the repayment process?

(c) What is the experience of repayment notification communications sent from HMRC (paper and digital) for different taxpayers?

(d) What are the barriers and pain points including those that prevent different types of taxpayers from taking up the Personal Tax Account option to claim their repayment?

(e) What are the key triggers for customer support service use and the outcomes sought by taxpayers?

(f) What is their awareness of the Personal Tax Account in general and as an option for processing tax repayments via BACS?

(g) What are their experiences of their relevant repayment process?

(h) BACS payment requested via PTA including views about ease of access, usability and timeliness?

(j) Was the repayment via payable order/cheque?

1. Explore taxpayer views about what a better repayments experience could look like, considering tactical solutions and whether these would address taxpayer needs:

(a) What do taxpayers need in relation to the repayments process including information, timeliness, ease, choice, transparency, trust?

(b) What would the ideal taxpayer repayments experience look like?

1. Understand how taxpayers respond to proposed transformational solutions:

(a) How do taxpayers respond to proposed transformational solutions and how would these address taxpayer needs?

1. Understand how taxpayers want to be communicated with and supported in order to maximise positive engagement with potential new repayments processes and services:

(a) What are taxpayers’ communication preferences, including form, content, frequency?

(b) What support would taxpayers require for the proposed repayment solutions, including increased awareness of Personal Tax Account, information about more significant changes to the repayment process, communications to better direct and support repayment recipients, and additional self-service guidance/support provision requirements?

Each interview mapped the repayments journey to mark key events in the repayments process, as well as how participants felt at the time, and what drove the decisions and actions taken. Cognitive interviewing techniques were used to understand how different aspects of the process influenced thoughts, feelings and immediate behaviours. Interviewees were asked to recall their state of mind at the time of the event, including external factors, their emotional response, and cognitive factors. Due to the time lapse between the repayment and the date of interview, stimulus materials were used, which comprised copies of the P800 notification letter and screenshots of the Personal Tax Account interface, to re-immerse interviewees in their repayment journey.

The research drew on thematic analysis to synthesise the findings and identify the different taxpayer groups. Patterns with regards to the context of respondents were used in the categorisation. This includes information on taxpayers’ personal circumstances, engagement and confidence with personal finances, as well as their typical behaviour when dealing with financial issues.

Challenges

The research presented here is qualitative and explores a range of views in depth. There are 2 key limitations to keep in mind when reading this report. Firstly, the sampling presented some issues for the range of views that were initially collected.

Some taxpayers may not have engaged at all with HMRC (i.e. they did not contact HMRC to process BACS payment and instead preferred to wait for a payable order/cheque), and therefore may have decided to not engage with this research. To mitigate this, this research included participants that did not contact HMRC to opt in or opt out of the research.

Secondly, participant recall of the process presented as a challenge for journey mapping. The sample included participants whose P800s were dispatched in June to July or December 2021, and who may also have had multiple interactions with HMRC, which weakened their ability to reflect in-depth on their repayment journey. To mitigate this, the research drew on stimulus materials to prompt recall, as well as journey mapping and cognitive interviewing techniques, to take participants back to the circumstances in which they made decisions

8.2 Appendix B

Table 2: Achieved sample

Variables	Number of interviews (BACS)	Number of interviews (payable order)
Process: BACS Personal Tax Account	13	-
Process: BACS phone	3	-
Process: Deferred payable order	-	21
Process: In-year claim payable order	-	3
Gender: Male	8	11
Gender: Female	8	11
Age: 18 – 29	5	7
Age: 30 – 44	3	7
Age: 45 – 59	4	9
Age: Over 60	4	1
Repayment amount: less than £100	5	7
Repayment amount: between £100 and £600	6	11
Repayment amount: greater than £600	5	4
Repayment month: June or July 2021	9	17
Repayment month: December 2021	7	5
P800 notification method: Paper	8	18
P800 notification method: Digital	8	1
Contacted HMRC to resolve repayments issues: Yes	6	18
Contacted HMRC to resolve repayments issues: No	10	11
Has a Personal Tax Account: Yes	-	2
Has a Personal Tax Account: No	-	20