Exploring customer views on granular authorisations for agents within Making Tax Digital for Income Tax Self Assessment

Question 1

1.  Executive Summary

Accepted Answer

1.1 Background and objectives

Making Tax Digital (MTD) is a key tax transformation programme and a core part of the government’s 10-year Tax Administration Strategy. It will help reduce the tax gap by requiring businesses and individuals to:

keep digital records
use software that works with MTD
submit updates every quarter, bringing the tax system closer to real-time

MTD for Income Tax Self Assessment (ITSA) will mean that self-employed individuals and some landlords, earning above certain thresholds, will need to comply with these new requirements.

HM Revenue and Customs (HMRC) is currently developing the digital services for MTD for Income Tax Self Assessment. Within these new digital services, HMRC is considering introducing changes to the way Income Tax Self Assessment customers can authorise their agent (or agents) to act on their behalf. One of the options being explored is whether to develop ‘granular authorisations’ for agents, which could be applied by the customer to restrict or control the tasks an agent can see or do within the account or on their behalf.

This change would take place in the context of the introduction of multiple agent functionality, which HMRC has committed to delivering. Multiple agent functionality will allow more than one agent to be authorised by a customer at the same time for their MTD for Income Tax Self Assessment account.

HMRC wanted to understand Income Tax Self Assessment customers’ views on granular authorisations for agents within the context of the forthcoming changes, and therefore commissioned Verian (formerly Kantar Public) to carry out qualitative research with this customer group.

To address the aims of the research, Verian carried out 40 in-depth interviews with self-employed individuals and landlords earning at least £30,000 who paid Income Tax through Self Assessment and were working with at least one agent. Interviews lasted up to one hour and took place either online (via Zoom) or by telephone. All interviews took place between 22 August and 11 September 2023.

As qualitative research, this study seeks to understand the breadth of views and opinions of customers in detail. It does not aim to provide representative findings of all customers.

1.2 Key findings

1.2.1 Current use of agents

Customers’ use of agents to complete their Income Tax Self Assessment tax and filing processes varied across the sample, and can be broadly summarised as follows:

hands-on customers carried out all or most Income Tax Self Assessment tasks themselves
flexible customers used a combined approach of carrying out some tasks themselves and delegating some to their agent
hands-off customers outsourced as much of their tax and filing process to their agent as possible

Most participants typically had high levels of trust in agents. They also tended to be apprehensive about dealing with their taxes, so they could see the benefits of using an agent to some degree. Financial confidence (that is the participant’s own perception of their personal capability to complete finance-related tasks) and digital confidence both played a role in determining their approach to working with agents. However, there were also other factors which were important in shaping agent usage, including personal preference, being ‘time poor’, wanting the reassurance of a specialist, or having the financial means to outsource Income Tax Self Assessment tasks.

Usage of multiple agents was driven by three factors: the need for specialist skills and knowledge that one agent could not offer, higher workloads among larger businesses with more complex tax affairs and/or the desire to use cheaper agents for specific tasks.

1.2.2 Customer views on their current arrangements for Income Tax Self Assessment administration

Before introducing any of the new concepts, participants provided views on their current Income Tax Self Assessment administration arrangements. Most customers were content with the current arrangements including how they engage with, and authorise, their agent. They had no strong desire for change. However, participants may have never given any previous consideration to the fact that there might be other authorisation options.

1.2.3 Granular authorisations

Granular authorisations tended to be viewed as ‘nice to have’ by participants who had more complex income streams, had high digital and/or financial confidence, and those forming part of the hands-on or flexible groups. These participants tended to be either those who had more than one agent already, or those without an authorised agent. They viewed granular authorisations as a positive step towards gaining more control and transparency within the customer-agent relationship.

There were also a few participants who felt that granular authorisations might prompt more dialogue between the customer and agent, which could lead to increased clarity about what their agent was doing for them.

Other participants saw granular authorisations as either unhelpful or unnecessary, with the potential to cause greater confusion or become time consuming. They tended to be from the hands-off group who were ‘time poor’ or did not have Self Assessment income as their main income. They also tended to have simpler income streams or lower turnover and to only use one agent.

1.2.4 The option to authorise multiple agents for Income Tax Self Assessment

Participants who currently used more than one agent felt that the option to authorise multiple agents to engage with HMRC on their behalf could be directly relevant to them. They felt that it might create greater efficiencies in allowing the most appropriate person to access the account, rather than having to divert all questions through a single authorised agent. Another perceived benefit related to potential cost savings, as multiple agent access could enable customers to use authorised bookkeepers instead of a (more expensive) single authorised accountant to do their bookkeeping.

Others, currently working with only one agent, could identify hypothetical value in the option to authorise more than one agent, even though they did not think they would ever need to do this themselves.

However, the option to authorise more than one agent to interact with HMRC in relation to Income Tax Self Assessment was generally not perceived as immediately relevant to participants. Some, particularly those who only used one agent, were ‘time poor’ and had high trust in agents, struggled to anticipate a situation where this would be useful.

1.2.5 MTD for Income Tax Self Assessment

Most participants had not heard of MTD for Income Tax Self Assessment previously, or only vaguely recognised the term. Following the explanation of the requirements during the interview, some participants felt that it would make the Income Tax Self Assessment process more efficient and reduce the need for an agent.

However, those undertaking more Income Tax Self Assessment tasks themselves reported that they expected to absorb the extra tasks needed for MTD and felt reluctant about the perceived extra time needed to learn new systems.

Others felt that the additional time and technical knowledge required would lead to greater reliance on their current agent, particularly where participants were ‘time poor’, had lower digital confidence or had a lower turnover. Despite this, none of them suggested that they would need to use an additional agent as a result of the requirements of MTD for Income Tax Self Assessment.

Some participants did not expect there to be any change in their use of agents, particularly where their agent was already submitting quarterly VAT returns for them digitally, and where participants had high digital confidence and were happy with their agent’s level of involvement in their tax affairs.

1.2.6 Granular authorisations and multiple agents in the context of MTD for Income Tax Self Assessment

After explaining the new MTD for Income Tax Self Assessment requirements to participants, most customers’ views on the option to introduce granular authorisations and multiple agent functionality did not change.

However, some felt a little more positive about the proposed changes. Even if they did not necessarily see the changes as directly relevant for them, they could still appreciate the benefits for others. Typically, these participants already worked with more than one agent, completed VAT returns and had higher turnovers. This group anticipated that having control over different levels of authorisation could be useful for those working with more than one agent in the future, and that limiting authorisations could help to control agent cost.

Others saw slightly less value in the proposed changes. They tended to be hands-on customers who expected to take on the extra tasks needed for MTD themselves, rather than rely more heavily on agents. They were often not digitally confident, had lower turnover and were ‘time poor’. They felt that the proposed changes added more complication that they would have to get to grips with.

Question 2

2. Introduction

Accepted Answer

This section outlines the background to the research, as well as detailing the objectives and methodology used in this study.

2.1 Background and context

Making Tax Digital (MTD) is a key tax transformation programme and a core part of the government’s 10-year Tax Administration Strategy. It will help reduce the tax gap by requiring businesses and individuals to:

keep digital records
use software that works with MTD
submit updates every quarter, bringing the tax system closer to real-time

MTD for Income Tax Self Assessment will mean that self-employed individuals and landlords with an income of more than £50,000 will be mandated to comply with new digital requirements from April 2026. Subsequently, self-employed individuals and landlords with an income between £30,000 and £50,000 will be mandated to comply with the new requirements from April 2027. HMRC is therefore developing the digital services for MTD for Income Tax Self Assessment.

Within these new digital services, HMRC is considering introducing changes to the way customers can authorise their agent (or agents) to act on their behalf. Agents include businesses that are paid to deal with the tax affairs of others. They also include professionals who advise or act on behalf of others in relation to their tax affairs.

At present, customers can authorise one agent to deal with their Income Tax Self Assessment requirements and that agent is able to complete all related tasks and interact with HMRC on their behalf. There is, however, no option to restrict or control what the agent can access or the ability to allow more than one agent to act on their behalf.

One of the options being explored is whether to develop ‘granular authorisations’ for agents, which could be applied by the customer to restrict or control the tasks an agent can see or do within the account or on their behalf.

This change would take place in the context of the introduction of multiple agent functionality, which HMRC has committed to delivering. Multiple agent functionality will allow more than one agent to be authorised by a customer at the same time for their MTD for Income Tax Self Assessment account.

In practice, alongside the introduction of granular authorisations, this would allow customers who currently use a bookkeeper for certain tasks and an accountant for other tasks, to authorise both agents to engage with HMRC on their respective tasks. Under the current system, only one of these agents would be authorised to access information and interact with HMRC on the customer’s behalf.

2.2 Research objectives

HMRC wanted to understand Income Tax Self Assessment customers’ views on granular authorisations for agents within the context of the forthcoming changes, and therefore commissioned Verian (formerly Kantar Public) to carry out qualitative research with this customer group. The overall aims of this research were to explore the views and understand the preferences of Income Tax Self Assessment customers through an exploration of:

how customers comply with their Income Tax Self Assessment tax requirements under the current system, and their experiences of engaging with their agent
customers’ views on the proposed changes for agent authorisation including the option to have granular authorisations, as well as the option to authorise more than one agent to deal with HMRC on their behalf
customers’ views on the proposed changes within the context of MTD for Income Tax Self Assessment

2.3 Methodology

To address the aims of the research Verian undertook a qualitative approach, conducting 40 in-depth interviews with self-employed individuals and landlords earning at least £30,000, who paid Income Tax through Self Assessment and who were working with at least one agent. All participants were required to have filed an Income Tax Self Assessment return in the last 12 months. Interviews lasted up to one hour and were conducted either online (via Zoom) or by telephone All interviews took place between 22 August and 11 September 2023. Please see a copy of the interview guide at Appendix 1.

Participants were shown a series of stimulus materials throughout the interview to help them visualise new ideas and concepts. The stimulus material included a fictional customer, ‘Jane’, and presented certain scenarios in which setting up granular authorisations might be helpful. Following this, another scenario was presented to explain why customers might want to consider authorising more than one agent to act on their behalf.

Additional materials were also shown to participants to explain the requirements of MTD for Income Tax Self Assessment, as most participants were unfamiliar with it. Finally, the earlier concepts of granular authorisations and authorising more than one agent were revisited with participants, in light of the new MTD requirements.

2.4 Sampling and recruitment

A purposive sampling approach was used to ensure a diverse and inclusive sample, reflecting key characteristics of this audience. The sample was sourced from records of customers who had taken part in HMRC’s Individuals, Small Businesses and Agents customer survey and agreed to be recontacted, as well as via free find methods.

Quotas were applied to the sample based on sets of defined characteristics. Customer type was a primary quota and ensured we recruited across the following five customer types: landlord only, sole trader only, sole trader and also in paid employment, sole trader paying Income Tax Self Assessment and VAT, landlord and sole trader.

Another key criterion for inclusion was that the customer worked with an agent who was authorised to deal with HMRC on the customer’s behalf. However, 5 interviews were undertaken with participants who were selected because none of the agents they worked with were authorised to engage with HMRC on their behalf. This ensured a diverse range of views were included. Other criteria included the number of agents employed, annual income / turnover, and age of the business.

Other tertiary criteria were monitored to ensure a mix across the sample including gender, age, location, number of employees and sector. Complete details of the sample frame can be found at Appendix 2.

2.5 Interpreting findings

As qualitative research, this study seeks to understand the breadth of views and opinions of customers in detail. It does not aim to provide representative findings of all customers, but quotas were used to ensure we heard views from different customer types within the 40 interviews undertaken.

Given the low prevalence of customers who already use more than one agent, Verian were asked to over-recruit from this group as there was an assumption that they may be more likely to find the proposed changes directly relevant to their current agent use.

It is important to bear in mind the hypothetical nature of the conversation, given that participants were asked to understand potential new ways of authorising agents and to imagine these being applied in the future. Many participants were also introduced to the concept of MTD for Income Tax Self Assessment for the first time. This may mean that we only have spontaneous responses, which may have been different if participants had been given further consideration time.

Please also note that throughout this report, case study illustrations use pseudonyms.

Question 3

3.  Use of agents

Accepted Answer

This section considers the different ways in which Income Tax Self Assessment customers (self-employed individuals and landlords earning at least £30,000 turnover) engage with their agent (or agents) to complete their Income Tax Self Assessment.

3.1 Existing agent use

Participants’ use of agents to complete their Income Tax Self Assessment tax and filing processes varied across the sample, and can be broadly summarised as follows:

hands-on customers carried out all or most Income Tax Self Assessment tasks themselves
flexible customers used a combined approach of carrying out some tasks themselves and delegating some to their agent
hands-off customers outsourced as much of their tax and filing process to their agent as possible

Key characteristics and behaviours of each group are detailed below.

3.1.1 Hands-on customers

Hands-on customers opted to complete all Income Tax Self Assessment tasks themselves and were unlikely to have an authorised agent in place. However, they did not act completely alone, preferring to seek ad-hoc advice from someone who was professionally knowledgeable, such as an accountant or financial advisor, when needed. The 5 respondents who were deliberately recruited because they did not use an authorised agent all fell into the hands-on category. They felt financially and digitally confident enough to deal with the majority of tasks themselves, helped in part by their relatively straightforward tax affairs.

Hands-on customers were conscious that they were saving money by minimising agent use, and wanted to spend as little money as possible on agents. Some also had lower levels of trust in agents and a desire for more control over their finances and accounts. The table below shows which tasks tend to be done by the participant and the agent in the hands-on customer group.

Table 1: Tasks completed by participant and agent - hands-on customer group

Tasks completed by participant	Tasks completed by agent
Administrative tasks	Ad hoc advice
Bookkeeping	Checking Income Tax Self Assessment returns
Tax calculations
Income Tax Self Assessment tax return
VAT (if VAT registered)
Interacting with HMRC

3.1.2 Flexible customers

Flexible customers undertook some Income Tax Self Assessment tasks themselves and used an agent for ‘crunch-points’ in the tax year. They had enough financial and digital confidence to carry out some tasks but felt reassured working with an agent on certain key tasks. They also tended to be somewhat conscious of the cost of using an agent, which drove their desire to do what they could for themselves.

Flexible customers typically used an agent to submit their end of year Income Tax Self Assessment returns, as they were worried about getting something wrong. They had high trust in agents as specialists, coupled with a low desire for control. The table below shows which tasks tend to be completed by the participant, and which by the agent.

Table 2: Tasks completed by participant and agent - flexible customer group

Tasks completed by participant	Tasks completed by participant or agent	Tasks completed by agent
Administrative tasks	VAT (if VAT registered)	Tax calculations
Bookkeeping	Interacting with HMRC	Income Tax Self Assessment return
		Checking Income Tax Self Assessment return

3.1.3 Hands-off customers

Hands-off customers used agents for a ‘full service’ approach to their Income Tax Self Assessment, delegating as many tasks as possible. They had complex tax affairs, typically due to having employees or needing to pay more than one type of tax. They were ‘time poor’ and had low interest in being involved. They also had sufficient turnover to feel comfortable about paying an agent to complete most of their Income Tax Self Assessment administration for them.

Hands-off customers’ levels of financial confidence varied. Some had lower levels of confidence in tax, whilst others, although financially confident, preferred to use specialist knowledge to ensure they were being as tax efficient as possible. They had high trust in agents, coupled with a low desire for control.

“I think I if I had to do my own Self Assessment I would be pretty overwhelmed, but that might be because of my age and because I’ve always done it one way… You’re frightened of doing it wrong because it’s a big deal, you know, it’s your business and you don’t want to be stung with a silly tax bill because you made a mistake.” (Sole trader only, authorised agent – engages with one agent, £85,000 to £150,000, hands-off)

The table below shows which tasks tended to be done by the participant, and which by the agent for the hands-off customer group.

Table 3: Tasks completed by participant and agent - hands-off customer group

Tasks completed by participant	Tasks completed by agent
Administrative tasks	Bookkeeping
	Interacting with HMRC
	VAT (if VAT registered)
	Tax calculations
	Income Tax Self Assessment tax return
	Checking Income Tax Self Assessment returns

3.2 Factors underlying agent use

3.2.1 Financial and digital confidence

Levels of financial confidence, that is the participant’s own perception of their personal capability to complete finance-related tasks, did not always dictate whether, or how, participants worked with agents. Personal preference, being ‘time poor’, wanting the reassurance of a specialist, or having the financial means to outsource Income Tax Self Assessment were more important factors in whether people chose to use an agent. These factors cut across all levels of financial confidence.

“It’s not an incompetence around financial matters, it’s a lack of understanding of the rules around HMRC, about what we can and can’t claim, and then also an ignorance and a fear of placing the wrong information in the wrong box on the return. So I guess I see my accountant almost as a buffer between me and HMRC.” (Sole trader and also in paid employment, authorised agent – engages with one agent, £30,000 to £50,000, flexible)

Similarly, agent use varied across different levels of digital confidence. Most participants identified themselves as having at least ‘medium’ to ‘high’ digital confidence. Within each of these groupings, some participants carried out all Income Tax Self Assessment tasks themselves, whilst others delegated everything to their agent.

3.2.2 Higher turnover

Higher turnover had an impact on agent use for three core reasons:

those with a higher turnover were less likely to be concerned about the financial cost of using agents to complete some or all of their Income Tax Self Assessment obligations
those with a higher turnover were also more likely to be VAT registered (although some customers in the sample who were below the £85,000 threshold were also VAT registered) and therefore had more tax-related tasks to complete than those who were non-VAT registered
there was also more incentive for higher earners to use agents’ specialist knowledge in order to comply with regulations, but be as tax-efficient as possible

3.2.3 Trust in agents

Across the sample there were high levels of trust in agents. Participants therefore displayed high levels of willingness to give their agent control over their tax affairs and administration. These high levels of trust were also reflected in low levels of concern about data security in relation to providing their agent access to information.

It is worth noting that levels of trust in agents were consistently high and did not vary due to turnover, complexity, digital or financial confidence. In addition, the convenience of having an agent to complete their Income Tax Self Assessment typically outweighed other factors for customers, including for example, the cost of agent use or the desire to have more control over their financial matters.

3.2.4 Using multiple agents

The rationale for using more than one agent was explored with participants. Some cited the need for specialist skills and knowledge as a key reason they used more than one agent. An additional agent could provide advice on other areas of tax or specialist skills not offered by just one agent.

Other participants, including those with higher workloads, or working in larger businesses with more complex tax affairs, used more than one agent to help boost capacity for tasks which could not be managed by one agent.

Financial efficiency was also cited as a reason for employing an additional agent. This included, for example, where it was cheaper to employ a bookkeeper than to pay an existing accountant for bookkeeping services.

Question 4

4. Granular authorisations

Accepted Answer

This section starts by covering participants’ views on the current arrangements for authorising agents to deal with HMRC on their behalf, in regard to Income Tax Self Assessment. It then details responses to the proposed idea of granular authorisations for agents, whereby customers could restrict or control which tasks an agent can do within their account on their behalf.

4.1 Customer views on the current arrangements for authorising agents

Participants were first asked to share their thoughts on the current arrangements for authorising agents to deal with HMRC on their behalf. At present, customers do not have the option to apply granular authorisations so cannot restrict what an agent can see or do on their behalf.

Overall, participants were content with the current approach and most had never considered this could change. Given the trust participants had in their agent (or agents), it made sense that their agent had full access to their Income Tax Self Assessment information and records.

“I have no issue with the current situation. The process is straightforward at the moment.” (Sole trader only, authorised agent – engages with one agent, £85,000 to £150,000, hands-off)

“I’ve never really thought about it before. But I’d still prefer my accountant to do everything, I’d hate for them to feel restricted.” (Sole trader only, authorised agent – engages with one agent, £50,000 to £85,000, hands-off)

4.2 Customer views on the option to have granular authorisations for agents

Participants were told that HMRC might change the way customers authorise their agent to deal with Income Tax Self Assessment in the future, by giving the customer the ability to restrict or control which tasks an agent can do on their behalf.

Using stimulus materials, participants were then introduced to the hypothetical example of ‘Jane’, a sole trader and landlord, who has an accountant who is authorised to interact with HMRC on her behalf. She owns a business making candles, which she sells via Etsy. This was followed by an example of a hypothetical digital form Jane’s agent might fill out, with different tasks that Jane could authorise them to do, or not, on her behalf.

Initial responses to the proposed concept of granular authorisations for agents were mixed. Most participants felt the concept was ‘nice to have’ rather than a necessary change. Some saw little value in having the option to authorise their agent to only carry out specific tasks, but some could see potential value.

4.2.1 Seeing value in having granular authorisations

Participants who considered the concept of granular authorisations to be valuable were, in theory, receptive to the idea of having more control. However, in practice many participants did not think they would actually reduce the full control their agent already had.

Granular authorisations tended to be viewed as ‘nice to have’ by participants who had more complex income streams, high digital and financial confidence, or those forming part of the hands-on or flexible groups. These groups were generally more knowledgeable and engaged with their finances, so were more likely to consider applying granular authorisations, and less likely to revert to authorising the agent for all tasks.

The ability to apply granular authorisations also tended to appeal more to customers working with an agent who was not currently authorised to engage with HMRC on their behalf. This was partly because maintaining control was one of the reasons for their current arrangements, so they appreciated the added layer of restriction this change would bring.

In addition, granular authorisations were also more likely to appeal to those already working with more than one agent, where agents currently perform different tasks. In this case, participants felt that granular authorisations could help avoid confusion and errors by separating the tasks each agent could do.

There were a few participants who felt that granular authorisations might prompt more dialogue between the customer and agent about their arrangement. Customers who highlighted this benefit included those who were more enthusiastic about granular authorisations, those who were less enthusiastic, and customers across different levels of financial confidence. Even if they did not think they would apply granular authorisations, they felt that having this conversation with their agent could lead to increased clarity about what their agent was doing for them. It was therefore considered a positive step in gaining more control and transparency in the customer-agent relationship.

Tasks such as changing addresses and organising payments and repayments were mentioned as areas where customers would particularly appreciate having more control, and therefore saw the value of granular authorisations slightly more.

“I like the increased control and having the ability to differentiate what an agent can see. I’d like to be able to prevent my agent from seeing my personal details such as child support or divorce payment.” (Sole trader paying ITSA and VAT, authorised agent – engages with multiple agents, £85,000 to £150,000, flexible)

“I didn’t know an agent could change my address or make payments. This is the sort of additional security that would be helpful to have.” (Sole trader only, authorised agent – engages with multiple agents, £50,000 to £85,000, hands-on)

4.2.2 Case study: Martha likes the idea of more control

Martha has multiple sources of income. She is an independent sole trader working as a contractor, as well as a Director for another company. She also owns a couple of properties which she rents out. Martha is hands-on and completes her own Income Tax Self Assessment returns. She has an accountant to help with her finances, but they are not authorised to deal with HMRC on her behalf.

Martha thinks granular authorisations are a good step towards keeping the agent relationship as transparent as possible. Due to her complex situation, she likes the idea of having tiered permission levels to retain control and the ability to change permission preferences annually to account for her fluctuating situation.

Therefore, she likes the idea of granular authorisations, but doesn’t see them as life changing.

“What I want is to retain control, I don’t want to give everything over to an accountant. […] I like the idea of being able to change permissions year-on-year, given that the nature of my work fluctuates.”

4.2.3 Seeing little value in having granular authorisations

Participants who expected granular authorisations to have little or no value were happy with the current arrangements for Income Tax Self Assessment. They were not concerned about the different levels of authorisation.

These participants tended to be small business owners from the hands-off group. Some also did not have Self Assessment income as their main income. They generally reported that they had very little time for Income Tax Self Assessment returns and therefore wanted to outsource as much of the process as possible so that they didn’t have to think about it or engage with it much. They also tended to have simple income streams and worked with a single agent, so they perceived very little need for applying granularity. They were happy with the current arrangements and saw no need for added complexity. These participants had high trust in their agent and low levels of concern about data security.

For these participants the appeal of using an agent was to reduce their own personal involvement and time spent on Income Tax Self Assessment. As such, they had a low desire for more control over the actions their agent could take on their behalf. They wanted their agent to have comprehensive access to their information and felt that they would still authorise their agent for all tasks even if granular authorisation options were put in place.

“I don’t see any value in granular authorisations given my situation is so straightforward. If I didn’t trust my accountant, I wouldn’t use them.” (Landlord only, authorised agent – engages with one agent, £30,000 to £50,000, flexible)

“This isn’t of interest to me. I have to do two Self Assessments for income and capital gains, but I only want the one person to deal with them and not be restricted.” (Landlord and sole trader, authorised agent – engages with one agent, £85,000 to £150,000, hands-off)

4.2.4 Concerns raised about granular authorisations

There were two core concerns raised by participants with regard to the introduction of granular authorisations. Firstly, some felt that granular authorisations would create unnecessary administrative complications. Secondly, some participants were concerned that the customers may not understand the tasks they were authorising their agents to do, which could result in confusion. Thus, the premise of having more control through applying granularity would backfire in this scenario.

“My first thought was, is it a move towards needless complexity. Is it absolutely necessary? (Sole trader paying ITSA and VAT, authorised agent – engages with one agent, £50,000 to £85,000, flexible)

4.2.5 Case study: Nadia has a low desire for control

Nadia is 43 and married with two children. She works full time and also rents out one property with her husband. She has an accountant to save time.

She thinks accountants need access to all tax information to get a full picture of their clients’ finances. She does not think granular authorisations are valuable and she would always prefer to give her agent full authorisation, with no restrictions on the tasks they could do, in order to get maximum support. She cannot think of any element of Income Tax Self Assessment which she would like more control over.

“I mean to be honest, it’s not something that I want because I have no intention, you know, I’ll just default to keeping it straightforward. I won’t be doing extra myself and it’s not something I’ve got time for. I will do whatever I need to do to reinstate maximum support.”

4.3 Renewing authorisation

Currently, HMRC recommends that customers renew their agent’s authorisation every two years, but does not prompt them to do so. During interviews, participants were also asked about their views on the frequency and suitability of refreshing agent authorisations and the possibility of being prompted to do so in a digital world.

The need to review agent authorisations every two years was generally seen as a reasonable expectation. Some felt it would act as a good reminder to reflect on the service they were receiving from their agent and whether they should continue to use them. However, others preferred to be able to renew their authorisation as and when it was required, if at all. If they had the ability to change an authorisation at any time, it was also suggested that access to clear instructions about how to remove an authorisation would be necessary.

Renewing authorisations was also identified as being more important if more than one agent could be authorised, since HMRC would not have to remove a customer’s authorisation for one agent to authorise another.

“Renewing agent authorisations every two years sounds fine, so long as it was an easy process.” (Landlord only, authorised agent – engages with one agent, £30,000 to £50,000, hands-off)

“I don’t think renewing every two years is necessary. If I was in a situation where I wanted to change who I was authorising, I’d just contact HMRC directly to inform them myself.” (Sole trader paying ITSA and VAT, authorised agent – engages with one agent, over £150,000, hands-off)

Participants expressed mixed opinions regarding the best method to renew their agent’s authorisation. Whilst some were happy to do this via email, others felt they could easily miss an email. Some instead liked the idea of being prompted when they logged into their HMRC account either online or via the HMRC app. Those who preferred any of the digital reminder options often made the point that they preferred the idea of being paperless.

“Authorisation should be done via email, not paper, and made as easy as possible to do.” (Landlord and sole trader, authorised agent – engages with multiple agents, £85,000 to £150,000, hands-off)

Question 5

5.  Authorising more than one agent to deal with Income Tax Self Assessment

Accepted Answer

This section explores participants’ views on the idea that Income Tax Self Assessment customers will, in the future, be able to authorise more than one agent to deal with HMRC on their behalf.

5.1 Customer views on current arrangements

Prior to introducing participants to the idea of being able to authorise more than one agent to deal with HMRC on their behalf, they were asked for their thoughts on only being able to authorise one agent, as per the current arrangements.

To date, participants had not experienced any problems related to only having one agent authorised to engage with HMRC on their behalf. Even those who were already using more than one agent were not sure if they needed or wanted to be able to authorise more than one.

5.2 Exploring views on the value of having multiple authorised agents for Income Tax Self Assessment

Participants were told that HMRC might introduce the option to authorise more than one agent to deal with HMRC on their behalf. They were then shown a further example based on Jane’s situation, which demonstrated a scenario where Jane had authorised two agents: a bookkeeper and an accountant. It set out that any agent Jane authorised would be able to access her information and records, but that the actions they could carry out on her behalf would be limited by the level of authorisation Jane had assigned to them.

5.3 Customer views on authorising more than one agent for Income Tax Self Assessment

The option to authorise multiple agents did not seem immediately relevant to many participants. Some, particularly those who only used one agent, were ‘time poor’, and had high trust in agents, could not anticipate any situations where this would be useful.

Participants who already worked with more than one agent felt this change would be more directly relevant to them. Others, working with only one agent currently, could identify hypothetical value in being able to authorise more than one agent, even though they did not think they would ever need to do this themselves.

5.3.1 Customers who saw value in authorising multiple agents for Income Tax for Self Assessment

The participants who felt that this change would be directly relevant to them, and valuable, were primarily those using more than one agent for their financial affairs already. They therefore felt this could apply to their existing reality.

However, some customers who were only using one agent could also see possible value for themselves. They tended to be customers who used one agent with high turnover and complex finances, which may reflect the fact that these groups could envisage themselves using more than one agent in the future.

The perceived benefits of being able to authorise multiple authorised agents centred around efficiencies. If a customer had more than one authorised agent, any of the agents would be able to deal directly with HMRC, rather than having to interact via the one authorised agent.

Participants also anticipated potential cost savings, as multiple agent access could enable customers to use authorised bookkeepers instead of a (more expensive) single authorised accountant to do their bookkeeping.

Multiple agent access was also expected to bring an added benefit of mitigating risk. If an agent was unable to work due to unforeseen circumstances, then another authorised agent could log in if something needed to be attended to.

“I would be happy to introduce multiple agents. My current bookkeeper isn’t authorised so I can see the benefit, as it could be useful for them to have access as a backup. However it would also be fine if the change didn’t happen, it’s working fine as it is.” (Sole trader paying ITSA and VAT, authorised agent – engages with multiple agents, £85,000 to £150,000, flexible)

“There could be a problem that a bookkeeper could work on where they needed to talk to HMRC on your behalf. But if the accountant had to do this, they’d charge you more!” (Landlord and sole trader, agent has not been authorised, over £150,000, flexible)

It is also worth noting that there were some customers across the sample who used one agent but could identify hypothetical value in being able to authorise more than one agent, even though they did not think they would ever need to do this. They could see how it might be useful for others and did not mind the option being introduced even if they didn’t think that it would be directly relevant to them.

Therefore, whilst some participants across the sample could see benefit in being able to authorise more than one agent to deal with Income Tax Self Assessment, they generally did not feel that this was a vital change.

5.3.2 Customers who saw less value in authorising more than one agent for Income Tax Self Assessment

The option to authorise more than one agent to deal with Income Tax Self Assessment was not seen as immediately relevant to most participants using one agent. Some struggled to identify any benefits from it at all, particularly ‘time poor’, hands-off customers with a single authorised agent.

For these participants, the concept of employing more than one agent suggested an added burden of time and effort in having to manage multiple agents. These participants also did not expect it to be any cheaper to use a bookkeeper over an accountant, so they could not see any potential cost savings from this arrangement either.

“In our situation it would add too much complexity to brief somebody to do the bookkeeping and somebody to be accountant and tax advisor. Neither would have a complete view of the business, it would just end up us spending more time briefing the bookkeeper, briefing the accountant.” (Sole trader paying ITSA and VAT, authorised agent – engages with one agent, £50,000 to £85,000, flexible)

There were three main concerns raised about the idea of authorising more than one agent for Income Tax Self Assessment. These concerns were expressed predominantly by those who could not see the value in being able to authorise more than one agent. However, they were occasionally identified by those who saw some value in the proposition as well.

the risk of miscommunication and misunderstanding between agents, as participants perceived that the burden would fall on the customer to manage this
potential administrative complications if agents are from different organisations
risks arising from sharing personal data with too many people

“This raises concerns as it increases the risk of error between different people. I can also imagine it will lead to increased administration and the responsibility would be on me to check everything.” (Sole trader and also in paid employment, authorised agent – engages with multiple agents, £50,000 to £85,000, flexible)

“It might be a bit of a headache having two different people from different organisations being linked, some people might think, ‘am I sharing too much information?’ Ideally, you’d go for an accountant who’s got an in-house bookkeeper, but some people might have different choices.” (Landlord and sole trader, authorised agent – engages with multiple agents, hands-on)

Question 6

6.   Granular authorisations and multiple agent authorisation in light of MTD for Income Tax Self Assessment

Accepted Answer

This section explores how the upcoming changes to MTD for Income Tax Self Assessment affected participants’ views about granular authorisations and having more than one authorised agent.

6.1 Introducing MTD for Income Tax Self Assessment

Participants were told that if the proposed changes to introduce granular authorisations were to take place, they would happen within a wider programme of MTD for Income Tax Self Assessment.

Stimulus materials were used to explain that under the new requirements, which will come into effect from 2026 (for those earning over £50,000) and 2027 (for those earning over £30,000), self-employed people and landlords will need to:

keep digital records for their business and property income and expenditure
submit quarterly updates of income and expenditure to HMRC, using MTD compatible software
finalise Income Tax Self Assessment declarations by 31 January each year, as per current requirements

It was also highlighted to participants that when the changes come into effect, it could mean agents or customers needing to carry out tasks they had not needed to complete previously.

Participants were asked for their initial reactions, then asked about the likely impact on how they would authorise agents in light of the new requirements.

Participants were then shown a mock up of a digital form demonstrating granular authorisation options, as they might (hypothetically) appear under MTD for Income Tax Self Assessment. The form was similar to that previously shown to participants (as described in section 4), in that it set out a number of different tasks that Jane could authorise her agent to do, or not, on her behalf, under MTD for Income Tax Self Assessment.

Participants were then asked to assess whether MTD for Income Tax Self Assessment changed their views on the value of granular authorisations or being able to authorise more than one agent.

6.2 Awareness of MTD for Income Tax Self Assessment

Participants were generally not aware of ‘Making Tax Digital’ (MTD), or only vaguely recognised the term. Notably, those who were more familiar with the term ‘Making Tax Digital’ (usually as a result of needing to submit quarterly VAT reports) were nevertheless unaware of the upcoming changes to Income Tax Self Assessment.

As such, participants were required to digest new concepts and information before considering the impact MTD might have on the way they work with agents or their approach to granular authorisations. This may mean that we only have spontaneous responses which may have been different if they had further consideration time.

6.3 Initial responses to MTD for Income Tax Self Assessment

Participants’ initial reactions to MTD for Income Tax Self Assessment centred around two core elements: new software and quarterly updates.

6.3.1 New software for MTD for Income Tax Self Assessment

The prospect of needing new software to handle the MTD for Income Tax Self Assessment requirements elicited varied reactions. Some thought that it might make the Income Tax Self Assessment process more efficient, whilst others were concerned about the time cost and financial cost it might bring. Participants who already kept digital records were more likely to be positive about MTD for Income Tax Self Assessment, seeing it as less of an adjustment to their current practices.

“The agent will probably have to invest in some software, and because they do the annual return for us, they’ll probably say we’ll do the quarterly return for you or the quarterly update as it’s called here. But it will simply result in higher bills.” (Sole trader paying VAT and ITSA, authorised agent – engages with one agent, £50,000 to £80,000, flexible)

6.3.2 Quarterly updates

The prospect of being required to submit quarterly updates also evoked mixed reactions from participants. Some considered more frequent updates to be a good motivator for them to keep on top of their finances.

“I think the idea of quarterly updates is good, it puts more pressure on you to get it done and I often forget. This would ensure I stay on top of things, I’d definitely stay on top of the quarterly updates if it became a requirement.” (Sole trader paying ITSA and VAT, authorised agent – engages with one agent, £85,000 to £150,000, flexible)

“It’s probably going to be super easy and I have no problem with the quarterly updates because if everything is on new software it’s already there. It’ll probably just be a reminder.” (Sole trader only, authorised agent – engages with one agent, £85,000 to £150,000, hands-off)

Those who found the idea less appealing felt that the requirement should be optional, rather than mandatory, depending on turnover.

“It’s already a pain as it is, I don’t see why having more updates is going to make things easier. In fact, I think it’ll make things a lot more difficult and cause a lot more work.” (Sole trader and also in paid employment, authorised agent – engages with one agent, £50,000 to £85,000, hands-off)

6.4 Expected changes to agent use in light of MTD for Income Tax Self Assessment

Participants were also asked to consider how their agent use might change in light of MTD for Income Tax Self Assessment. Opinions were mixed, with some thinking there would be no change, whilst others felt they would use their agent (or agents) either more or less. The rationale for each of these potential outcomes is detailed below.

6.4.1 Expectation that the amount of work customers give their agent would stay the same

Participants who were already using their agent for MTD for VAT did not foresee any changes to the level of work required of their agent, given that they were already set up and in the process of doing quarterly returns anyway.

Digitally confident participants, who expected to be able to administer the quarterly updates themselves, also did not anticipate any changes to the way they used their agent. This is because they did not plan to assign any additional tasks to their agent because they thought they would take on the extra tasks themselves.

6.4.2 Case study: Lucy does not expect her agent use to change

Lucy owns a floristry business. Her accountant does ‘everything’ for her. Lucy’s accountant uses MTD for VAT so is very familiar with quarterly updates and the use of software.

MTD for Income Tax Self Assessment requirements seemed like a natural extension of Lucy’s current situation where her agent could continue using the same software and can submit quarterly updates for VAT and Income Tax Self Assessment at the same time. Lucy reported she thinks she would never need an additional agent as this would just overcomplicate her situation.

Lucy was also not overly interested in having the option to set granular authorisations because she trusts her agent. Therefore, Lucy did not think her agent use would change after she was introduced to MTD for Income Tax Self Assessment.

6.4.3 Expectation that the amount of work customers give their agent would increase

Some participants who were ‘time poor’, had lower digital confidence, had lower turnover or were under the VAT threshold, felt that the amount of work they put through their agents would need to increase with the implementation of MTD given the need for quarterly updates. None of these participants reported that they would start working with another agent, in light of MTD for Income Tax Self Assessment.

6.4.4 Case study: Allen expects to have slightly more reliance on his single agent

Allen works part-time as a support worker. He also owns a counselling practice. Allen completes his own bookkeeping, which he sends to his accountant who then submits his Income Tax Self Assessment returns on his behalf. Allen doesn’t fully understand tax calculations and he is worried about making mistakes. He also does not want to deal directly with HMRC. Allen describes his agent as a buffer between him and HMRC.

In light of the MTD for Income Tax Self Assessment requirements, Allen thinks he will need to use his agent significantly more often due to the need to submit quarterly updates, which will increase costs. However, he does not feel he has a choice in this because he does not want to complete quarterly updates himself, nor can he afford to employ another agent.

6.4.5 Expectation that the amount of work customers give their agent would decrease

Some participants expected that the requirements of MTD for Income Tax Self Assessment would lead to a decrease in the amount of work they put through their agents. This group viewed MTD for Income Tax Self Assessment in a positive light and considered it would make the process quicker and easier to do, reducing the need for agent intervention.

Participants who expected to use their agent less tended to have high digital confidence, and in some cases even viewed their agent as having lower digital confidence.

6.4.6 Case study: Rhys has considered ending his current agent relationship

Rhys is a treasury manager and owns three rental properties. He has an accountant and a tax specialist who is a close friend to help with overall advice about investments and pensions.

Rhys was very positive about the MTD for Income Tax Self Assessment proposed changes, prompting him to further consider ending his current relationship with his accountant. He thinks the new quarterly regime will likely lead to increased accountant costs, and that his accountant may struggle to use the new software.

Given the digital changes, Rhys thinks it would be quicker and cheaper to authorise an online company to undertake his Income Tax Self Assessment administration instead, including quarterly updates. The option to be able to authorise more than one agent was also appealing to him as it would enable his tax specialist to also have the ability to view tax returns on his behalf if needed.

6.5 Customer views on proposed changes in light of MTD for Income Tax Self Assessment

Regardless of participants’ initial reactions to the new MTD for Income Tax Self Assessment requirements, their views on the proposed changes to granular agent authorisations and being able to authorise more than one agent for Income Tax Self Assessment remained largely the same. However, it should be noted that there is a possibility that participants had not ‘joined the dots’ in terms of how MTD for Income Tax Self Assessment might relate to the proposed changes, given that they were being asked to respond in real time to new interrelated concepts.

In some cases, participants did see slightly more or less value in having granular agent authorisations, or the ability to authorise more than one agent.

6.5.1 Proposed changes seen slightly less favourably

Participants who saw slightly less value in the proposed changes in light of MTD for Income Tax Self Assessement were those who took a hands-on approach to completing Income Tax Self Assessment, had a lower turnover, were ‘time poor’ and/or lacking in digital confidence. They foresaw that they would need to absorb the extra work required to submit quarterly updates and felt reluctant about having to increase the time spent completing their Income Tax Self Assessment or learning new systems. In this context, the proposed changes were felt to add further complication.

“It’s not something I want to do. Honestly, the very idea of having another level of admin is absolutely intolerable.” (Sole trader and also in paid employment, authorised agent – engages with one agent, £50,000 to £85,000, flexible)

6.5.2 Proposed changes seen slightly more favourably

Participants who were already using more than one agent, and those who thought they might in future, felt slightly more positive about the new options. They could see possible cost efficiencies arising from being able to authorise their bookkeeper and accountant to focus on different activities. Specifically, they might authorise their bookkeeper to submit quarterly returns and their accountant to deal with end of year tax and filing.

In addition, some customers, who were only working with one agent, saw the proposed changes favourably from a hypothetical point of view, considering how ‘others’ might benefit in the future, rather than perceiving a direct benefit to themselves.

One participant also highlighted that, hypothetically, those in business partnerships could benefit from the option to apply granular authorisations and multiple agent functionality. They outlined that whilst there may be a need to share a bookkeeper or accountant for the business side of a partnership, they may want to have their own agent to manage any other income streams and to have a separation between the two.

Question 7

7.  Conclusions

Accepted Answer

7.1 Current use of agents

This research initially explored ways in which Income Tax Self Assessment customers, with a turnover above £30,000, engage with their agent (or agents). This provided some context for the further exploration of customers’ views on granular authorisations for agents and multiple agent authorisations.

Participants’ use of agents to complete their Income Tax Self Assessment tax and filing processes varied across the sample, and can be broadly summarised as follows:

hands-on customers used their agent for the bare minimum of tasks, wanted more control of their affairs and wanted to limit the cost of agent use as much as possible
flexible customers did some of their Income Tax Self Assessment tasks and used their agent for ‘crunch points’ in the tax year
hands-off customers did as little as possible with regards to their Income Tax Self Assessment and were ‘time poor’ and/or had complex tax affairs

The decision to use an agent was influenced less by financial and digital confidence and more by availability of time, the desire for specialist advice or reassurance, having the financial means to outsource to an agent and personal preference. In general, levels of trust in agents were high and participants were content with their current approach to fulfilling their Income Tax Self Assessment requirements.

It was clear that the way in which participants engaged with agents shaped their subsequent views on granular authorisations and the option to authorise multiple agents. Another important factor was whether they considered themselves to be ‘time poor’. A further key factor which influenced views on the proposed changes was whether the participant already used multiple agents.

7.2 Response to the proposed changes

The option to introduce granular authorisations for agents received a mixed response. Some participants considered it a ‘nice to have’, especially if they had complex tax affairs or were using more than one agent already. They were also more likely to come from the hands-on or flexible groups. This applied particularly in the case of hands-on customers, working with an agent who was not currently authorised to engage with HMRC on their behalf, because their current arrangements reflected their desire to maintain control over their Income Tax Self Assessment. They therefore appreciated the layer of restriction that granular authorisations would bring.

Others did not think granular authorisations for agents would be beneficial and that providing this option could potentially cause more complication. These participants typically only used one agent and were happy for their agent to fulfil all Income Tax Self Assessment tasks. They were also more likely to come from the hands-off group and be ‘time poor’.

When introduced to the idea of being able to authorise multiple agents to engage with HMRC on their behalf, again, participants who already worked with more than one agent had distinct views. They could see how this change could be directly relevant to them. They felt that it might create greater efficiencies in allowing the most appropriate person to access the account, rather than having to divert all questions through a single authorised agent. They also anticipated potential cost savings, as multiple agent access could enable them to use authorised bookkeepers instead of a (more expensive) single authorised accountant to do their bookkeeping.

Where participants were only working with one agent, the option to authorise multiple agents did not seem immediately relevant. Some, particularly those who were ‘time poor’, and had high trust in agents, could not anticipate any situations where this would be useful. Others could identify hypothetical value in the option to authorise more than one agent, even though they did not think they would ever need to do this themselves.

7.3 Response to the proposed changes in light of MTD for Income Tax Self Assessment

Participants were generally not aware of the requirements for MTD for Income Tax Self Assessment until they were introduced to them during the research. Following the explanation, some thought it would make the process more efficient and might reduce the need for an agent, enabling them to handle more of their Income Tax Self Assessment administration themselves.

Others were concerned about the time and cost burden that might result if they potentially had to spend time learning new systems, or if they ended up relying more on their current agent. However, no one suggested that they would need to use an additional agent as a result of the requirements of MTD for Income Tax Self Assessment.

In terms of their views on granular authorisations and the ability to authorise more than one agent in light of MTD for Income Tax Self Assessment requirements, participants’ views generally did not change.

However, there were some participants whose views became a little bit more or less positive as a result. For example, participants who were already using more than one agent, and those who thought they might in future, felt more positive about the new options. They anticipated that that the changes could help to control agent cost.

Participants who were hands-on and expected to take on the extra tasks needed for MTD themselves, rather than rely more heavily on their agent, felt slightly less positive about the proposed changes. They were typically not digitally confident, had lower levels of turnover or were ‘time poor’. They felt that, on top of the extra time needed for Income Tax Self Assessment activities, the proposed changes added more complication that they would have to get to grips with.

Question 8

Appendix 1: Interview guide

Accepted Answer

Please see separate attachment.

Question 9

Appendix 2: Sample breakdown

Accepted Answer

Total interviews: 40

Eligibility criteria for individuals to take part included:

all individuals who file Self Assessment returns for income tax (but not for dividend income or because they pay Higher Income Child Benefit charge)
all have a turnover/income of at least £30,000
use an agent who is authorised to interact with HMRC on their behalf (apart from quota of 5 who use an agent, but not an Income Tax Self Assessment authorised one)

Table 4: Number of interviews by quota category (primary criteria)

Primary criteria (fixed quotas)	Sub-categories	Count
Use of agent	Authorised	35
Use of agent	Not authorised	5
Type of customer	Landlord only	10
Type of customer	Sole trader only	7
Type of customer	Sole trader and also in paid employment	5
Type of customer	Sole trader paying Income Tax Self Assessment and VAT	10
Type of customer	Landlord and sole trader	8

Table 5: Number of interviews by quota category (secondary criteria)

Secondary criteria (flexible targets)	Sub-categories	Count
Single or multiple agent	Single agent	27
Single or multiple agent	Multiple agents	8
Annual income/turnover	£30,000 to £50,000	16
Annual income/turnover	Over £50,000 to £85,000	10
Annual income/turnover	Over £85,000 to £150,000	9
Annual income/turnover	Over £150,000	5
Age of business/length of time as landlord	Less than 5 years	9
Age of business/length of time as landlord	Between 5 and up to 10 years	12
Age of business/length of time as landlord	More than 10 years	19

Use of single agent or multiple agent totals 35 instead of 40, as 5 respondents didn’t use an authorised agent.

Table 6: Number of interviews by quota category (tertiary criteria)

Tertiary criteria (mix and monitor)	Sub-categories	Count
Age	18-34	7
Age	35-54	20
Age	55+	13
Gender	Male	22
Gender	Female	18
Sector	Agriculture, forestry and fishing	0
Sector	Mining, quarrying and utilities	0
Sector	Manufacturing	0
Sector	Construction	2
Sector	Motor trades	0
Sector	Wholesale	0
Sector	Retail	1
Sector	Transport and storage (inc. postal)	2
Sector	Accommodation and food services	2
Sector	Information and communication	2
Sector	Property	12
Sector	Finance and insurance	1
Sector	Professional, scientific and technical	2
Sector	Business administration and support services	5
Sector	Public administration and defence	0
Sector	Education	1
Sector	Health	5
Sector	Arts, entertainment, recreation and other services	5
Sector	Other	0
Region	Greater London	5
Region	South East	11
Region	South West	3
Region	West Midlands	3
Region	North West	3
Region	North East	1
Region	Yorkshire and the Humber	2
Region	East Midlands	0
Region	East of England	4
Region	Scotland	2
Region	Wales	3
Region	Northern Ireland	3
Employees	No employees (just participant)	27
Employees	Has employees	13

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1. Executive Summary