Taxpayer errors are widespread. In a global Accenture survey of taxpayers, over two thirds of respondents made errors on tax returns (or other tax form submissions) in the past two years. This equates to millions of stalled taxpayer interactions, which become a significant burden on revenue agencies and on taxpayers on themselves.
Many of these errors – which are mostly inadvertent, misinformed or careless – could be prevented with better service design and digital systems, and this could lead to considerable gains. In the UK, £8 billion (US$11.4 billion) a year in tax is lost from avoidable taxpayer errors.
Adding to lost revenue, errors reduce productivity and increase pressure on the revenue workforce, while thousands of repetitive checks and corrective processes reduce job satisfaction and morale.
Designing more intelligent, personalized, user-centric tax systems can help dramatically reduce the impact of taxpayer errors.
But it should be acknowledged that this is a challenging task. Tax legislation is complex and revenue agencies are charged with communicating it, and actioning its effects on, taxpayers who are often unfamiliar with tax rules.
The reality is that tax affairs are often a chore, rushed through at the last minute, as people juggle demanding jobs, young children, health issues or many other matters. To lower error rates, tax compliance needs to be easy; limiting the time and energy the average citizen needs to provide.
Disconnected services, excessively complex processes and a confusing mix of paper and digital interactions all increase the burden and lead to lower accuracy.
A fully digitalized system can help enormously, but advancing technology will not, by itself, solve the taxpayer errors problem. Even digital systems with advanced automation and risk assessment capabilities may still seem overcomplicated and burdensome for taxpayers.
The primary route to fewer errors is to improve the tax experience at the same time as exploiting digital systems. This means putting the customer at the heart of the design approach when developing and improving tax systems.
We encourage revenue agencies to “co-create” with taxpayers; exploring and designing concepts together to produce solutions that are viable and feasible from every angle. This can help to develop services that provide the right options for the right taxpayers.
For example, our research shows that those between 18 and 34 have the highest error rates. Revenue agencies need to understand why this is, and look at customized solutions to help address younger people’s needs.
We recently completed a fascinating report on taxpayer errors, which explores how service design excellence could help drive improvement in this area.
What we conclude is that, with a stronger service design approach, interacting with the revenue agency can become quicker and more intuitive, thereby making it easier to comply. This leads to more accurate and on-time returns, cuts the time revenue staff spend correcting errors, and leaves taxpayers less frustrated and less burdened by the tax system.
Disclaimer: The contents of this material are for informational purposes only. Unless otherwise specified herein, the views and/ or findings expressed herein are Accenture’s own.