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1. Executive summary

This research study aimed to understand the attitudes of individual taxpayers towards data sharing between HMRC and third parties, in light of HMRC鈥檚 Tax Administration Strategy (TAS) reforms. The study involved an initial exploratory qualitative stage followed by a quantitative survey. The research involved individual taxpayers paying tax via PAYE and or Self-Assessment from a range of employment groups, including employed, self-employed and micro employers and those earning income via online work or sales platforms. It also covered different age groups and those using agents.

1.1. Current attitudes toward and understanding of data sharing

Data sharing was spontaneously linked by participants to social media platforms when introduced in the qualitative research.

The biggest perceived benefits of data sharing related to convenience and time saving. Six in ten respondents selected each of 鈥榠t is more convenient if it saves me having to provide information鈥� and 鈥榠t saves time if I don鈥檛 have to provide the same information each time鈥� as benefits in the survey.

GDPR regulation and opt-in/opt-out options were seen to protect participants鈥� data in the qualitative research. Despite this recognition, the survey found taxpayers had concerns around data security and fraud (87% selected a related concern).

General digital confidence was high (71% were confident in their own abilities) but respondents鈥� 鈥榗onfidence in their ability to make informed decisions regarding data sharing鈥� was lower (49% confident). The qualitative research suggested this was often because people lacked any real awareness and understanding of what data sharing is about.

1.2. Views on HMRC sharing data with or receiving data from third parties

Participants had limited views on HMRC and data sharing and it was not something they were aware of spontaneously or had considered.

The survey found that confidence in HMRC to keep taxpayers鈥� data confidential (58% confident, 15% not confident) was high, as it was for government more generally (49% confident, 19% not confident). The low proportion of people who were not confident reflected the qualitative finding that sharing data between government departments was accepted and normalised.

However, the qualitative research found that lower levels of trust in third parties impacted attitudes towards data sharing with HMRC. There were concerns about HMRC gathering data from banks and building societies and online platforms, as well as a nervousness around third-party software. Perceptions of a third-party as a secure data holder was a key driver to acceptance of data sharing, alongside an understanding of鈥痺hy HMRC is sharing or receiving data with them.

1.3. Reactions to the use of data sharing for the Tax Administration Strategy

There was a mixed response to HMRC鈥檚 use of data sharing in the context of the TAS reforms explored in the qualitative research, with some focusing on benefits and others raising concerns.

Six factors drove this variation in responses:

• level of trust in HMRC: Those with lower levels of trust in HMRC to implement the reforms successfully or to act in their or the public鈥檚 best interests identified more concerns and were less amenable to data sharing

• use of an agent: Those currently using an accountant and those who had high levels of trust in their agent, were more open and amenable to them accessing their own single customer account

• complexity of tax circumstances: For PAYE customers, there was an acceptance of data sharing between HMRC and their employer, but data sharing with third parties beyond that could seem unnecessary, whereas self-employed and gig economy workers welcomed some of the benefits that data sharing with third parties would bring

• experience of saving data to a cloud: Those who had already shared data to a secure cloud had higher comfort levels than those with limited experience of saving data this way, who were relatively fearful about data security

• attitude towards data privacy: Those more concerned about data privacy expressed more concern about HMRC sharing and receiving data with third parties and via third-party software

• digital confidence: Those with greater experience and confidence in using technology felt more comfortable and prepared for sharing and receiving data via new software

Respondents in the survey were prompted with 5 specific scenarios of data sharing for tax purposes:

• HMRC using customer data to enable pre-population of online tax or benefits

• HMRC receiving data from banks and building societies about monies coming into accounts, including interest earned on savings and investments, enabling in year adjustments to amount of tax due

• HMRC receiving sales information from online sales platforms (such as eBay and Etsy), so taxpayers do not need to provide this information themselves

• online work platforms (such as Uber) automatically deducting the tax due each month, enabling taxpayers to pay tax more regularly and within the tax year

• HMRC giving agents access to all their clients鈥� data and enabling them to do more on their behalf. This element was only asked of those using a tax agent

Respondents who were broadly comfortable with data sharing were more likely to be digitally confident and be more impacted by the concepts introduced in the scenarios.

All respondents were comfortable with at least one element of data sharing, with this driven by high levels of comfort with pre-population and greater data sharing with agents. Two thirds (69%) of all respondents were comfortable with pre-population. Amongst those using a tax agent, most (81%) were comfortable with agents having more access to their data and being able to do more things on their behalf.

There were lower levels of comfort with the other scenarios. Around half were comfortable with data being shared with HMRC by their bank or building society (50%) and platform-based employers (51%). The lowest level of comfort was seen for data being shared by online sales platforms (38%).

Those directly impacted by the concepts in the scenarios showed higher levels of comfort, but also greater concerns due to their closeness with the scenario. The qualitative research suggested that this particularly applied to people selling or working through online platforms, as they had a better understanding of how and why this would work. However, they also had more concerns, particularly about the quality of the data and the burden of making changes if they believe data to be incorrect. Small numbers of relevant respondents in the survey means this difference was not quantified.

1.4 Drivers of acceptability of data sharing

Being asked for permission for data sharing increases levels of comfort, with the ability to opt-in (73%) being by far the preferred option, compared with an opt-out approach (16%).

Being asked for permission offered reassurance even for those who were less digitally confident, or who were not comfortable with each data sharing scenario in principle. The qualitative research suggested that this was because it gave people the opportunity to understand how and why data sharing was needed.

However, the biggest driver of increased comfort across scenarios was the ability for individuals to check and correct their data. In particular, having this control in place for pre-population increased the proportion of respondents who were comfortable with this element of data sharing from 69% to 83% of all respondents.

In conclusion, data sharing is an emotive topic with mixed responses reflecting lack of awareness and understanding of the issues. Reassurances are required on security, control, accuracy and privacy of their data to overcome latent concerns. However, data sharing presents an opportunity to contribute to streamlined and positive digital experiences.