Research and analysis

Contact method preferences and digital appetite research - executive summary

Published 28 September 2023

Quantitative research exploring customer preferences for engaging with HMRC and for using digital channels.

HM Revenue and Customs (HMRC) Research Report 728.

Research conducted by the National Centre for Social Research (NatCen) in November 2022. Prepared by NatCen (Bernard Steen, Olivia Lucas, Eliska Holland, Jerome Swan) for HMRC.

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

Key Messages

1. for simple tasks, most customers said they would prefer to use online channels, whereas for more complex tasks around half of customers reported to prefer offline channels. Many customers chose offline rather than self-serve channels because they wanted reassurance that they had completed tasks correctly

2. a key objective for this research was to understand the extent to which channel preference is primarily a result of individuals’ levels of digital capability, or whether there are also HMRC-specific factors involved. The research clearly confirms that both sets of factors are important. Whilst channel preference is strongly related to levels of digital capability, some HMRC tasks can be complex, and customers may struggle to understand terminology

3. added to this, the (perceived) consequences of mistakes can be severe. This means that customers who are otherwise confident and highly digitally capable chose offline channels, out of a need for reassurance and a fear of being punished for mistakes. Many customers felt they would be more likely to engage with HMRC online if services were easier to use and understand, and if HMRC could provide prompt and personalised reassurances online

4. the majority (86%) of customers were open to engaging with HMRC digitally in the future, but awareness of digital channels and associated support functions could be improved. Over half of less digitally capable customers (those who used the internet once a day or less) said they were at least somewhat willing to deal with HMRC online in future, suggesting there is scope to increase online engagement if the right solutions can be found

5. in part, this will mean increasing awareness of HMRC’s online channels, and support functions available to help people engage online: almost a fifth of customers were unaware of any online channels, and very few had used HMRC’s online support functions

6. HMRC customers were less likely to be digitally excluded than non-customers. However, amongst customers who were not digitally excluded (ie had used the internet in the last three months), some customers were less digitally capable than others. Eight percent used the internet just once a day or less and 11% did not use online banking

7. these less digitally capable customers were much less likely to choose online and self-serve channels for HMRC tasks. Levels of digital capability among HMRC customers were lowest amongst older customers

Executive Summary

Overview of the research and aims

HMRC’s vision is to be a trusted and modern tax administration and so they are committed to giving customers the digital experience they expect from a modern tax authority. HMRC’s aim is to improve the range and accessibility of its digital services, and move as much customer interaction to self-serve digital channels as possible whilst supporting customers and providing appropriate provisions for those who are digitally excluded. Given HMRC’s aims, an updated assessment of the population’s digital appetite and support needs was required.

HMRC therefore commissioned the National Centre for Social Research (NatCen) to carry out research into customer preferences for engaging with HMRC and the extent to which taxpayer appetite exists for a continued shift towards digital-first services.

Methodology

The research involved a large-scale survey using the NatCen Panel, conducted in November 2022. The NatCen Panel was chosen for 3 reasons:

1. a random probability design. The NatCen Panel uses the Postcode Address File (PAF), with addresses selected at random, and individuals randomly selected within households. Random probability sampling is the approach recommended by the Government Statistical Service when robust estimates for the general population are needed

2. a large sample. The survey reached 3,644 HMRC customers, allowing detailed analysis of subgroups. For the purpose of this research, HMRC customers are defined as people who interact with HMRC in an individual capacity, meaning that they paid tax (of any kind) or claimed tax credits or an HMRC-administered benefit

3. inclusive of the less digitally capable population. The majority of panellists were recruited face-to-face by trained interviewers. Panellists were then invited to complete the survey using letters, emails, texts and phone calls. They could complete the questionnaire online or over the phone. Most participants completed the questionnaire online

Analysis of the Labour Force Survey (LFS) was also conducted to provide more detailed analysis of the digitally excluded population, defined as those who have not used the internet in the last 3 months.

Key findings

What were the key factors that influenced channel preference amongst HMRC customers?

Customers were asked to think about a range of tasks, from less complex ones such as getting basic information from HMRC, to more complex ones such as letting HMRC know about a possible error. For relatively simple tasks, most customers said they would prefer to use an online channel, whereas for more complex tasks, roughly equal numbers of customers said they would prefer offline channels as would prefer online channels.

There were 3 main factors that influenced channel preference:

1. the difficulty and complexity of tasks. The more complex the task, the less confident customers were about completing them, and the more they preferred offline and assisted-serve channels. For some customers, online services and instructions were confusing and terminology was difficult to understand. Less digitally capable customers had lower educational qualifications, on average, and were therefore more likely to need support with difficult or complex tasks in future

2. levels of digital capability. HMRC customers were less likely to be digitally excluded than non-customers. However, some customers were less digitally capable than others. Less digitally capable customers were much less likely to choose online and self-serve channels for HMRC tasks

3. the need for reassurance and worries about the consequences of mistakes. These were the most commonly reported reasons for preferring offline channels, regardless of levels of digital capability. This was true for both simple and complex tasks. Even for customers who were digitally capable and confident completing HMRC tasks, when the consequences of mistakes were (perceived to be) serious, customers preferred channels that offer the potential for a two-way interaction with HMRC

How much appetite was there for engaging with HMRC digitally in future?

1. willingness to deal with HMRC online in future. Most customers (86%) said they were at least somewhat willing to deal with HMRC online in future. Over half of less digitally capable customers said they were willing, suggesting there is clear scope to increase online engagement if the right solutions can be found

2. awareness of online channels. In part, increasing online engagement may require improving levels of awareness of HMRC’s online channel offer and online support functions. Almost a fifth (18%) were unaware of any online channel for dealing with taxes. Sixty-three percent were aware of guidance on GOV.UK, but awareness was low for less traditional online channels (such as webchat, text, and social media). Only 14% had used an online support function such as live webchat with a HMRC representative or the customer support Twitter account

3. customer priorities for engaging online. When asked what would be most important to them if dealing with their taxes online in future, the most common response was receiving reassurance the task had been completed correctly, followed by being able to navigate HMRC’s online systems easily. Customers felt they would be more willing to engage online if HMRC services were easy to understand and use, and HMRC could provide quick and personalised reassurance

What was the level of digital exclusion and digital capability amongst HMRC customers?

Following the Office for National Statistics, a person is defined as ‘digitally excluded’ if they have not used the internet in the last 3 months. Those who are not digitally excluded are ‘digitally capable’, to varying degrees. This report uses 2 main measures of the degree of customers’ digital capability: how often they used the internet, and whether they used online banking. Less digitally capable customers were those who used the internet just once a day or less often, and those who did not use online banking.

1. digital exclusion in the general UK adult population. Analysis of the LFS showed that 8% of the general population were digitally excluded. The digitally excluded were disproportionately likely to be older, disabled and have few or no educational qualifications. Whilst digital exclusion was largely a consequence of age, there was also a group of younger people who were digitally excluded. Over half of this group were disabled and almost half had no educational qualifications

2. digital exclusion and capability amongst HMRC customers. The evidence suggests that HMRC customers were less likely to be digitally excluded than the general population. However, the level of digital capability among customers varied. Of those HMRC customers who were not digitally excluded, 8% used the internet about once a day or less and 11% did not use online banking. Only 4% of HMRC customers were both less frequent users and did not use online banking. Overall, 20% of HMRC customers said they would not attempt any of the 5 tasks online

3. online and offline engagement with HMRC. Three quarters (75%) of HMRC customers had online interactions with HMRC in the last 12 months, whilst 41% had offline interactions. Four percent only interacted with HMRC offline and 21% had no interaction with HMRC in the last 12 months. The substantial proportion of customers who had offline interactions with HMRC in the last 12 months indicates the high level of demand that remains for non-digital channels