Could HMRC’s approach help you sort out your problem clients?

Mar 9, 2021 | Client service

Over the years I must have heard every reason there is as to why accountants cannot get all of their clients to behave properly. Many still pay late and even more continue to ignore repeated requests to supply their accounting and tax data in good time.

Rather than rehash the advice I have given in the past here’s a variation that you may find (even) more compelling.

As you may have guessed from the title of this post, I want to offer you an analogy. It is drawn from some recently published research to improve HMRC’s  understanding of taxpayers’ perceptions of test messages to promote compliance. Stick with me on this!

Rather than assuming that all taxpayers think and act the same way, HMRC have identified 4 types of taxpayer who have outstanding tax liabilities. A bit like you might have different types of problem clients.

Here’s how HMRC distinguish problem taxpayers (and, on this occasion, let’s ignore the fact that HMRC call taxpayers ‘customers’):

  • ‘Blip’ customers: Made a mistake on their tax return which caused them to fall into debt with HMRC. They had a strong record of paying on time and viewed this instance of debt to HMRC as a ‘one-off’ mistake
  • ‘Uncertain or disorganised’ customers: Had forgotten to file or made a mistake on their tax return because they lacked experience, knowledge and/or confidence when dealing with taxes, which caused them to fall into debt with HMRC
  • ‘Affordability’ customers: were aware of the payment but lacked the funds to pay when it was due
  • ‘Tactical choice’ customers: included those who had a history of debt to HMRC and intentionally chose not to pay until it suited them.

The report concludes that a different approach is required for each of those 4 categories of taxpayer. Different messages need to be highlighted, even just subtle changes in the words and the sequence of messages can have an impact here.

You could adopt a similar approach with your problematic clients. I have suggested in the past that you might choose to send them different messages to those that go to your more compliant clients.

HMRC’s approach would take things even further and result in you distinguishing different types of problem clients. In so doing might you be able to categorise them in such a way as to ensure that your messages are better understood?

Common categories for problem clients and that might warrant subtly different messages might be:

  • The rude ones – unpleasant to deal with
  • The superior ones – think they know better than you
  • The slow ones – only get info to you at the last minute
  • The credit takers – only pay you at the last minute

It can also help to anticipate that in each group:

  • some do actually want to change and just need the right encouragement
  • some will never change (and may eventually end up as ex-clients)
  • some will say they want to change but won’t (they become even worse time-wasters and need to pay for this!)

Going back to the HMRC research, it is clear to me why sending the same standard messages to all problem clients is probably less effective than you might hope.  Can you see that too?

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