HMRC shifts to email and text to cut postage

Will Drysdale, Senior Reporter, Business & Accountancy Daily

In a bid to reduce costs and modernise the tax office, HMRC is going to start sending taxpayers texts and email updates, rather than so many letters.

HMRC has said it is ‘committed to modernising HMRC to become a digital first organisation’ and told Business & Accountancy Daily this means it will move to contacting taxpayers via email and SMS. The move to digital will save £50m a year by 2028-29.

The email and text notifications will only be sent to HMRC app users, and alerts will be sent when new documentation or information has been uploaded to the individual’s app by HMRC.

There is no precise timetable for the rollout of the new service.

An HMRC spokesperson told Business & Accountancy Daily: ‘Like many financial services that customers will already be familiar with using, HMRC is moving towards using a primarily digital-based service, sharing new communications safely and securely in the HMRC app and online.

‘We’ll use email and SMS to prompt customers when there is something new to view in their account so they don’t miss important information.’

Uptake of the HMRC app has been relatively strong with 1.7m people used the app each month and it is still being heavily promoted including on TV ads to push more people to download it.

The text and email approach could potentially increase fraudulent activity, as previously HMRC has been clear that it will never contact taxpayers via SMS or email, but now if people are expecting it, they could become less wary of being contacted this way.

Criticism of the lack of clarity in HMRC’s letters and use of complex language which taxpayers often find confusing and do not understand is also being addressed.

HMRC plans to simplify the language used in the letters sent to taxpayers. Just recently Business & Accountancy Daily covered a tax case where the appellant claimed he found the information HMRC was sharing in letters hard to understand, using it as one ground of their appeal.

The appeal was dismissed, but the appellant made a valid point of saying that without seeking professional help, which can come at a large cost, it is extremely difficult to understand complex issues around tax.

HMRC has confirmed it will be simplifying the language in both bespoke, and generic letters.

‘The government and HMRC will work with the Administrative Burdens Advisory Board (ABAB) and other stakeholders to simplify the language used in HMRC letters, both generic and bespoke, to make sure letters are accessible and easy to read,’ the HMRC spokesperson added.

‘This measure will contribute to XST’s [Exchequer secretary to the Treasury] commitment to simplifying the tax system and will help provide a better service to taxpayers.’

From June 2025, HMRC is going to stop issuing six different corporation tax letters deemed as ‘non-essential’, again to reduce the overall number of letters sent out and reduce costs. However, HMRC said there ‘will be no change to the overall corporation tax process’.

There are also plans to make it clearer to taxpayers when they need to register a self assessment tax returns as ‘the government recognises that reporting requirements for taxable income must be easy for taxpayers to understand,’ said HMRC.

To do so HMRC will work with professional bodies to ensure any guidance that is published going forward is clearly written and explained.

Lack of awareness about tax changes is a major issue; this happened when the high income child benefit charge (HICBC) was introduced over a decade ago in 2013 and has since caught out countless parents. However, penalties for this have begun to reduce.

Many parents who ended up at the First Tier Tribunal said that they were not aware of having to file a self assessment tax return if they earnt over the thresholds and were a PAYE employee. HMRC is addressing this issue in 2025 though.

The extension of Making Tax Digital for Income Tax for landlords and higher earning self employed individuals from April 2026 will need to be very well communicated to ensure taxpayers are up to speed with the major overhaul of the tax system.

As the use of artificial intelligence (AI) expands HMRC will work with the Government Digital Service to ascertain how the government overall can help businesses use GOV.UK guidance in their own AI powered services. HMRC said this is ‘so taxpayers can benefit from the latest AI solutions to help them find the information they need’.

Additionally, the government is developing a compliance guidance tool ‘to provide a better understanding of what to expect and what needs to be done at each stage of a compliance check’, said HMRC. This is planned to launch on 30 April 2025 and is planned to make it easier for taxpayers to ‘get things right and to understand their rights’.