Barriers to tax compliance: the tax problems experienced by older people

Speaker: Professor Jane Frecknall-Hughes, Nottingham University Business School

This seminar will report on the findings of a study funded by the Chartered Institute of Taxation (CIOT), which has examined the records of Tax Help for Older People (Tax Help), a tax charity which assists those (typically) aged over 55 with income of £20,000 or less who experience problems with taxation, most commonly income tax. The aim of this archive-based study was to explore the data in Tax Help’s case files and how that data might be analysed to identify the types of problems and issues that Tax Help’s clients experience; and to develop a typology of these (e.g., systemic problems, pension-related issues, savings and investment related issued, issues related to particular life stages or life events).

For this section of the population, the Tax Help case files provide evidence to answer several important research questions:

• What is the level of tax literacy/knowledge among older individuals?
• What is the relationship between tax literacy and tax non-compliance? Is tax literacy important and what other barriers might prevent compliance?
• Does the level of literacy differ between those who have been self-employed and those who have been employed?
• What types of intervention are necessary to engage taxpayers successfully?
• How should working individuals be educated regarding tax prior to entering the labour market?
• How should entrepreneurs and business owners be educated prior to developing their activity?

Tax Help has seen a surge in requests for help in recent years, generated by the existence of an ageing population, who feel increasingly isolated by health and other problems associated with advancing age, the complexity of tax regulations, ifficulties with obtaining help from HMRC and often by exclusion from using digital media.  Changes in tax legislation and major life changes (e.g., retirement or ceasing to trade as a self-employed person, divorce, death of a partner or spouse) often present a range of problems relating to self-assessment, PAYE, the issue or completion of official forms, claimin allowances, etc.  For instance, many people when employed have no direct involvement with tax as this is dealt with by their employer under PAYE, so their ‘tax antennae’ are not tuned in to what happens when employment ceases.  Sometimes tax problems remain hidden for several years, and once they are uncovered frequently bring other related tax problems in their wake.  However, even ‘tax literate’ older people sometimes experience severe problems, because they cannot do what is required owing to a physical disability which creates a barrier to compliance.  A person who is blind cannot either a paper form or a computer screen, but might know exactly what should be done.  These and other barriers are considered in detail.

The full report on which this seminar is based can be accessed from the CIOT website.