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HMRC is sending taxpayers “digital nudges” as part of a trial - and reminding them how to correctly classify their business expenses has generated an additional £27m of income. HMRC, the Labour Party government has published the minutes of the most recent meeting of its Strategic Software Forum, which was introduced in 2020. Letters started in 2017, at which time HMRC started to receive information under the Common Reporting Standard. “HMRC, despite being data-rich, identified errors in how customers report dual-purpose expenditure,” the minutes say. “Digital nudges were introduced during end-of-year filing to prompt users to review and adjust entries related to private use.” READ MORE SUV drivers face new 'premium' to park their cars in part of UK Nudges take the form of “messages… reminding users to disallow private-use expenses and linking to relevant guidance”. After these messages were included for a subset of users as part of a “randomised controlled trial”, HMRC found “that users who received nudges were more likely to adjust their entries”. “Expansion of the programme is planned, including earlier interventions, broader outreach, and integration into everyday record-keeping tools,” the document adds. “The programme will also consider how this can be expanded to other tax regimes.” The HMRC forum also concluded that “continued collaboration with software developers is essential”. It added that providers of accredited tax-return platforms have an “interest in embedding business validation rules and sharing common error data to improve accuracy”. "Some concerns were noted about user reactions to prompts, potential for users to game the system, and the need for HMRC to share more data on common errors to support software improvements," it added. “Concerns were also raised about the need for commercial benefits to software developers to incentivise more work”, according to the minutes. “The agenda item concluded with a call for continued collaboration and feedback on how to better integrate nudges and support into the customer journey.”
