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Self assessment statistics paint mixed picture

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HMRC statistics reveal that almost 60% of self assessment return filings made during the past tax year were by agents. While the figures point to the Revenue’s successes with electronic filing, they also demonstrate how much work lies ahead on the road to Making Tax Digital.

14th Feb 2024
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Data provided by HMRC to AccountingWEB revealed that of the 11.2m self assessment (SA) tax returns filed before the deadline of 31 January 2024, 59% were filed by agents – a term which includes professional tax agents and family members or similar completing the return on behalf of someone else.

More than 6.6m returns were filed by agents, a figure that remains similar to its 2020 equivalent (the last year HMRC provided data for), and in percentage terms has slightly declined in those four years.

Below are figures for the past four self assessment deadline years split into who is making the filing (agent vs taxpayer) and how the return is filed (self assessment portal vs tax filing software).

  SA20 SA21 SA22 SA23 SA24
Agent using HMRC product 856,212 (12.84%) 775,847 (12.50%) 704,128 (12.05%) 778,223 (11.77%) 755,875 (11.41%)
Agent using third-party software 5,811,622 (87.16%) 5,433,279 (87.50%) 5,138,324 (87.95%) 5,833,434 (88.23%) 5,869,731 (88.59%)
Agent total 6,667,834 (63.8%) 6,209,126 (60.43%) 5,842,452 (59.38%) 6,611,657 (60.3%) 6,625,606 (58.91%)
           
Individual using HMRC product 3,665,512 (96.90%) 3,952,021 (97.2%) 3,886,478 (97.26%) 4,228,197 (97.1%) 4,486,672 (97.06%)
Individual using third-party software 117,197 (3.10%) 113,785  (2.8%) 109,410 (2.74%) 126,079 (2.9%) 134,682 (2.91%)
Individual total 3,782,709 (36.2%) 4,065,806 (39.57%) 3,995,888 (40.62%) 4,354,276 (39.7%) 4,621,354 (41.09%)
           
Total returns 10,450,543 10,274,932 9,838,340 10,965,933 11,246,960

“The first thing that jumps out at me is the split in terms of agent vs individual, which seems roughly equal,” Giles Mooney director of Absolute Software and TaxTV, told AccountingWEB. “This makes a mockery of both arguments I often hear: ‘everyone has to use an agent’ and of course ‘self assessment’”.

Figures lay bare MTD challenge 

One of the most startling statistics is the growth in individual taxpayers using the HMRC product, with almost 4.5m filing in this way – close to a million more than the corresponding figure in 2020.

And 97% of individual filings were made using HMRC’s portal. In comparison, just 2.91% of individuals used third-party products, with the percentage figure for this actually in decline since 2020. This statistic alone lays bare the scale of the challenge ahead for HMRC’s Making Tax Digital (MTD) ambitions. 

If the government keeps to its current timetable for MTD ITSA (income tax self assessment) mandation, the self assessment portal for in-scope, unrepresented taxpayers will be shut off from April 2026, and instead, more than 700,000 taxpayers (with an income of more than £50,000) will be required to adopt third-party software, with a further 900,000 (above the income threshold of £30,000) brought in for the following year.

Agents choose software efficiency

The figures also go some way to allaying accountants’ fears that they will be replaced by tax-filing tools in the near future.

“I don’t think software vendors are going to be threatening the existence of accountants any time soon,” Dean Shepherd, TaxCalc director of product, told AccountingWEB. “Those clients that are willing (and in rare cases, capable) of completing their own tax returns already have that option via HMRC’s website, so if the HMRC option becomes unavailable then the market for software vendors is really going to be restricted to individuals already filing and not making any great dent into the accountants’ territory.”

Agents are by far and away the biggest users of third-party software, with almost six million returns filed by agents using third-party products (almost 90% of agent returns), perhaps reflecting the growing need for efficiency in the modern accounting firm.

“The most surprising statistic for me is that 11.4% of agent-filed tax returns are done via HMRC’s website,” added Shepherd. “To me, it seems inefficient to do so and personal tax software was first on the list of technology I purchased for my own practice many moons ago. It would have been inconceivable for me to have used HMRC’s website for my clients.”

A win for electronic returns

Figures released by HMRC following this year’s tax deadline stated that 97% of returns had been submitted electronically, and further data sent by HMRC’s press team to AccountingWEB reveals a slight growth in this number since 2020.

  SA20 (at 31/1) SA21 (at 31/1) SA22 (at 31/1) SA22 (at 28/2) SA23 (at 31/1) SA24 (at 31/1)
Filed online (% of returns received) 93.95% 95.63% 95.60% 95.93% 96.61% 97.11%

Almost 27 years after the filing of the UK’s first electronic personal tax return, these figures go some way to demonstrating that HMRC’s electronic strategy has won out.

“This has turned out to be a win,” said Shepherd, “not least because electronic filing was something accountants broadly wanted, widely supported and helped become a success without the ‘stick’ of making it mandatory. If HMRC wants to see similar success for their more recent digital strategy, then perhaps they should learn a few lessons from the less recent past.”

“We sell fully integrated software packages to agents and individual tax return software to unrepresented taxpayers,” said Mooney. “Different people want different things so any suggestion there can be one answer to all scenarios is idiotic. It’s why MTD will only work if people can use a range of tools (including ones they’re already comfortable with) to file.

“People need to be comfortable with how they interact with HMRC and while many want (and obviously benefit massively) from the involvement of an agent, others – especially those with very simple affairs – have the tools to report their income,” Mooney continued. “Long may this split in agent vs individual and third party vs HMRC filing continue.”

Replies (19)

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By Tom+Cross
14th Feb 2024 16:44

The chief problem with HMRC, as far as I can see, is their determined arrogance to avoid addressing; honest and extended debate with agents and their representatives. A system can only work efficiently, if the various 'stakeholders' are (honestly and openly) sold the concept.

We have all seen, in the last month or so, how HMRC (nanny) knows best and the chaos which ensued from the lack of physical communication with HMRC for all tax issues.

One practical example of this is how some GP's operate, often solely down the 'remote' route, is that this can be downright dangerous and potentially negligent.

And it beggars belief that Sir Harra and his cohorts still take the view that agents (generally) shouldn't be able to communicate with HMRC, by email presumably, because HMRC don't have, and won't ever have, the resources to cope.

Yet another example of the shambles which the UK has become, evidenced by everything which doesn't share any common sense values. The public sector at its very best.

Thanks (5)
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By FactChecker
14th Feb 2024 17:44

Even without any heavy digging or detailed analysis, those figures (on their own) highlight the corrosive flaw that (fails to) underpin MTD ITSA.

Irrespective of the surprising number submitted via the SA portal by Agents, ALL of the 5,242,547 returns made this way will have been done on the basis of somewhere between zero and intermittent digital records (and with plenty of manual intervention along the way).
Hardly surprising since the taxpayer's objective is simply a complete (and hopefully correct) return to be submitted - their interest in having (let alone maintaining or reviewing) 'records' is close to the unfortunately named Xero.

And yet, HMRC remain wedded to those digital records (and their unbroken chain of traceability) being the essential bedrock of MTD!

Forget for a minute all those well-honed arguments about incomplete specifications of the process + implausibility of claims regarding tax forecasts (etc etc); there is absolutely no way in which anyone can *force* that many people to completely change the way in which they 'account' for their income & expenditure (in ways that are burdensome & expensive) without discernible direct benefit to that taxpayer. And certainly not in the envisaged timescales.

So ... either HMRC build (and provide free) the complete software 'solution' that records/maintains the digital records AS WELL AS handling the returns ... or they drop the mandation, but bring in sufficiently clear incentives (as they did with PAYE) that a groundswell of volunteers slowly builds.

Unfortunately they're incapable of delivering the first option and unwilling to entertain discussion around the second one ... so they will fail and we (not they) will all pay the penalties.

Thanks (11)
Replying to FactChecker:
Tornado
By Tornado
14th Feb 2024 18:29

So ... either HMRC build (and provide free) the complete software 'solution' that records/maintains the digital records AS WELL AS handling the returns ... or they drop the mandation, but bring in sufficiently clear incentives (as they did with PAYE) that a groundswell of volunteers slowly builds.

I did come to the same conclusion several years ago -

https://www.accountingweb.co.uk/any-answers/universal-free-tax-accountin...

It seemed the only logical solution nearly eight years ago and possibly still is.

Thanks (4)
Replying to FactChecker:
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By bendybod
19th Feb 2024 13:59

It did say that "agent" includes family members etc who filed on the taxpayer's behalf so maybe that goes some way to explaining the percentage of agents filing via the portal. Other than extremely small agents doing very part time work, I can't imagine that many would use the portal over third party software.

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By taxdigital
14th Feb 2024 18:29

Meanwhile the accountancy profession:
- contributed £98bn to the country's GDP
- supported nearly a million jobs
- generated £11.4 bn in tax revenues and
- exported £4bn worth of accounting services in a year.

Still HMRC can't fix their ADL.
(https://www.icaew.com/insights/viewpoints-on-the-news/2024/jan-2024/acco...)

Let us see what the politicians have to say about all this if/when they reply to ICAEW.
https://www.icaew.com/-/media/corporate/files/technical/economy/spring-b...

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By johnthegood
15th Feb 2024 07:52

Back to school Giles my lad - how is 41%/59% roughly equal?

What stands out to me loud and clear is that as much as HMRC are trying to sideline us, and as much as it might be possible to self assess, by far the majority of people still need an agent.

Thanks (6)
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By richards1
15th Feb 2024 10:44

As a non accountant 1 prefer using third party software to submit a return for my wife and I.

1. I can run what if scenarios without thinking that HMRC are recording what I am doing (if I was using their services.
2. I have an independant record of what was submitted so in the event of an HMRC system problem I have the original data, and a record of submission.
3. If I come across something I am not sure of I can always contact an accountant.

I have been doing this for the last 5 years and have found the system to work well and HMRC prompt in returning over paid tax.

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By johnjenkins
15th Feb 2024 10:52

I love statistics. How many of those filed by tax payers themselves had rent or mortgage payments etc. in them? 3 line accounts. I'm sure some with a bit of savvy come up with an artistic expenses figure.
I'm sure there are tax payers that take pride in getting it right and do not need an accountant, but few and far between. Will MTD stop that? No way Harrasay.

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By anthonystorey
15th Feb 2024 14:48

“I don’t think software vendors are going to be threatening the existence of accountants any time soon”.
Yes they will and the accountancy profession needs to start planning for mass redundancies now. Once a client is forced into having and paying for software that does everything why would they also pay for an accountant. The end result however (and I have seen it from the handful of my own clients who have started to use MTD software) is that HMRC will be fed a load of garbage that invariably leads to the wrong (i.e. less) tax being paid.

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Replying to anthonystorey:
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By MalcomB
15th Feb 2024 16:56

I agree. We had a client who decided to use the HMRC software to submit his own return for 2022/23. He is a high earner (£½ Million per year) and has shares in his Canadian employer that pay him over £4,000 in dividends each year.
Needless to say his submitted return only includes his salary and nothing else and so the HMRC sent him a refund!

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By rmillaree
15th Feb 2024 15:26

If the government keeps to its current timetable for MTD ITSA (income tax self assessment) mandation, the self assessment portal for in-scope, unrepresented taxpayers will be shut off from April 2026,

lol - did you have a chuckle to yourself when you typed this Tom?

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BirdnCo
By BirdnCo
15th Feb 2024 15:30

I wonder how many tax payers filed by using the likes of Xero, quickbooks etc? From our experience with any accounting software you put rubbish in and get rubbish out..

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Replying to BirdnCo:
Tornado
By Tornado
15th Feb 2024 16:03

BirdnCo wrote:

I wonder how many tax payers filed by using the likes of Xero, quickbooks etc? From our experience with any accounting software you put rubbish in and get rubbish out..

This is very true but my conclusion is that HMRC don't particularly care. The staff are going to get paid regardless of what they do or don't do, so why would they go out of their way to make work for themselves or take on responsibility when they don't have to.

So yes, rubbish in and rubbish out but only we know that, HMRC simply do not have a clue.

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By cmiskin
15th Feb 2024 18:36

Some very interesting stats here, thanks Tom, hadn’t seen them before. I have come across practitioners who use HMRC’s software, either in partial retirement for a few clients they have kept on or to keep the number of licences they need below a threshold where the cost would increase.

More stats on those that don’t file would be interesting, what sectors, reason for being in SA, when do the returns eventually get filed, how many get withdrawn, would they be in MTD etc

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Replying to cmiskin:
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By FactChecker
16th Feb 2024 12:52

100% agree with your final paragraph ... more stats on (indeed *any* breakdown of) those that 'fail' to be on HMRC's 'good list' will always be more informative (and potentially much more useful) than the figures currently published.

But then HMRC don't regard or treat the stats they publish as useful data in any sense - merely as cannon fodder for the PR machine, focussed on protecting their sorry posteriors and NOT on learning lessons (let alone identifying where and how any fine-tuning might actually lead to improvements all round)!

The kind of stats you suggest (and for which I've been calling for year after year) would require HMRC to be open to a 'no-blame' consideration of what could be made better ... anathema to their very core (culturally and personally).

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By Brads.Kings
16th Feb 2024 08:55

I suspect age is a big factor in these stats and might well explain all the shift away from agents as younger taxpayers are prepared to have a go and submit accounts and tax returns online.

My personal experience of clients that decide to submit their own limited company accounts to Companies House shows that they can submit accounts. What they submit is shockingly bad with huge errors, and demonstrates that software enhances the Dunning–Kruger effect.

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By Mr J Andrews
16th Feb 2024 13:43

Meaningless statistics for the vast majority of the taxpaying public mean more resources ousted from providing a decent service.
Why not provide statistical data of how good their correspondence / telephone response time is ?

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By norstar
19th Feb 2024 12:28

I saw some crackers this year - people approaching us, not liking the "right" advice so going off to do it themselves the wrong way as there was presumably less tax. Others who used to use us but did it themselves to save a few quid - and reported drawings as wages, mortgage repayments as a deductible expense etc.

As each January rolls around and HMRC increasingly sideline us agents, it becomes more apparent that they must be losing a fortune to people filing their own nonsense with the "user friendly" platform. What's worse is that in the cases I have filed a report for, absolutely nothing has happened. What's the point?

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Replying to norstar:
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By johnthegood
19th Feb 2024 13:56

My favourite was a limited company client that decided to do his own SATR, he entered all the figures from his company accounts on a Self Employment page - brilliant!

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