HMRC Letters to Logins

In a move that has sparked both cautious optimism and widespread concern, HM Revenue & Customs (HMRC) has announced it will cease most of its outbound postal communications by the end of the current Parliament. The government claims the shift will save £50 million annually, which is undoubtedly a tempting headline figure. But behind the budget lines lie deeper issues with access, accountability, and the fundamental nature of public service.

Under the new policy, HMRC will continue to send letters only when revenue needs to be collected, typically tax demands or enforcement notices. Routine reminders, informational updates, and many other touchpoints will now be confined to taxpayer online accounts.

This is progress in theory. In practice, it risks becoming yet another example of cost-efficiency trumping taxpayer experience.

Short-term pain, long-term gain?

So is this a long-overdue digital transformation, or a short-sighted cost-cutting measure? Many in the finance industry believe the answer lies somewhere in the middle, but the risks of going “all digital” are too significant to ignore. Here’s what businesses, individuals, and advisers need to understand, and why this shift should prompt not just a policy update, but a fundamental rethink of how we communicate with the UK’s tax authority.

A digital leap, or a service retreat?

HMRC’s ambition to become a “digital-first” organisation isn’t new; it has been well flagged in recent times. The Making Tax Digital (MTD) initiative has been years in the making, with increasing moves to digitise VAT, income tax, and corporation tax reporting.

What’s changed is tone and urgency, as seen in the latest spending review. The government signalled a significant step: eliminating 75% of HMRC’s outbound post. This would impact millions of taxpayers, particularly those not yet using or able to access digital services.

While HMRC spokespersons framed the change as aligned with “modern-day expectations,” many industry voices have raised serious concerns. Antonia Stokes of the Low Incomes Tax Reform Group noted that digitally excluded taxpayers risk being left in the dark, potentially missing essential obligations and eroding trust in the system.

Sean McCann of NFU Mutual took it further: “It appears HMRC won’t write to you unless you owe them money”. He warned that this could reduce the number of people claiming tax refunds, with older or less tech-savvy individuals losing out simply because they weren’t aware they were due a rebate.

This seems less like evolution and more like retreat for a department already facing criticism over customer service standards.

Who really loses when the post stops?

HMRC’s decision assumes a level of digital readiness that, frankly, doesn’t exist for all taxpayers. While many are online and comfortable with digital tools, a significant proportion of the population – often older, rural, or vulnerable – rely on physical correspondence.

According to Ofcom data, around 4.5 million UK adults do not have internet access at home, and many more have limited digital literacy, struggle with internet access, or simply lack confidence in navigating government systems. For these individuals, receiving a physical letter is not just convenient, it’s essential.

The risk isn’t just that online messages will not be read – it’s that they will not be seen at all.

At Wilkins Southworth, we regularly assist clients who have been unaware of messages in their Government Gateway accounts, sometimes for months. This has resulted in missed deadlines, penalties, and costly rectifications in more than one case.

Many taxpayers, especially those without regular adviser contact, may fail to act in time if physical letters stop arriving. This is not out of negligence, but simply because they were unaware that action was needed.

An overloaded system, now with less support

Let’s not forget the broader backdrop:

HMRC is already grappling with record-breaking delays and mounting complaints.
Call waiting times have more than doubled in the past five years, with callers spending a cumulative 7 million hours on hold in the 2022/23 tax year – the equivalent of 798 years.
Only 42% of calls are answered by a human adviser.
Letters and emails can take months to process.

The overall picture shows a system under strain, yet the few remaining channels that work for taxpayers are being cut back.

This latest move is part of a wider trend: fewer phone lines, fewer letters, fewer humans, and a plan for 90% of taxpayer interactions to occur online. However, unless HMRC is prepared to invest heavily in the quality, usability, and accessibility of its digital infrastructure, that 90% target could come at the cost of service quality, compliance, and public trust.

A risk to compliance and voluntary engagement

Any modern tax system should promote voluntary compliance by making it as straightforward as possible for taxpayers to meet their obligations. The decision to stop sending letters undermines that goal.

Why? Because letters, especially from HMRC, carry psychological weight. To put it bluntly, they get noticed and prompt action. A message buried in an online portal is not the same, particularly if you don’t know it’s there.

The unintended consequence could be a rise in missed returns, penalties, and unclaimed reliefs. It’s not hard to imagine: a taxpayer misses a digital notification, fails to respond, and suddenly finds themselves in breach, through no real fault of their own.

The problem is worse for those with legitimate rebates or refunds. If HMRC doesn’t write to inform them, and they don’t know to check their accounts, those funds may simply go unclaimed.

The automation paradox

An increased reliance on automation and artificial intelligence is driving much of this transition. HMRC’s IT systems are being updated to reduce manual processing, route queries through AI-driven systems, and replace human contact with algorithms. That’s efficient in theory, but troubling in practice.

We’ve already seen the consequences of system-driven errors: delayed VAT refunds, miscalculated PAYE codes, and duplicated compliance requests. Without robust checks and human oversight, these issues will only grow, and without clear, accessible recourse, affected taxpayers may struggle to find a resolution.

There is an argument that more automation with less communication is a recipe for confusion and, potentially, non-compliance.

What should change and why balance matters

Wilkins Southworth is no stranger to technology. We help our clients embrace digital tools daily, from cloud accounting platforms to digital filings and real-time dashboards. However, we also recognise that progress must be inclusive.

If HMRC wants to modernise successfully, it must maintain a hybrid approach that works for everyone. Looking at the broader picture, there are numerous ways in which digital can lead without leaving others behind:

Opt-in paperless communication, not forced digital silence.
Automatic fallback to postal communication when users haven’t accessed digital accounts.
Enhanced education and outreach, helping taxpayers understand the new system and how to use it.
Robust digital infrastructure, with clear user guidance and intuitive design.
Dedicated support for vulnerable taxpayers, including older individuals and those with accessibility needs.
Retention of core postal and phone services, at least until digital services are proven to be universally effective.

This isn’t about resisting change; it’s about ensuring the change is fair, functional, and doesn’t damage trust in the process.

Is cheaper always smarter?

A potential £50 million saving is undoubtedly a significant figure. However, it pales in comparison to the cost of reduced compliance, increased errors, and growing mistrust in the system. If just a fraction of taxpayers miss deadlines or abandon claims due to communication breakdowns, those savings could quickly be eclipsed by lost revenue and enforcement costs.

The risk is not just operational, it’s reputational. When taxpayers feel ignored or shut out, their engagement drops. Compliance becomes a chore, and trust deteriorates. For a tax system to work, there must be confidence in its fairness, clarity, and accessibility. Digital transformation should support that, not undermine it.

Final thoughts

HMRC’s move to cut most postal communications is not simply an administrative tweak; it’s a fundamental change in how the department interacts with millions of taxpayers. While digitisation offers clear long-term benefits (nobody is disputing this), rolling it out without appropriate safeguards risks leaving a growing number behind.

Many experts are urging HMRC and policymakers to reconsider the pace and scope of this transition. A balanced, inclusive approach is essential to ensure that paper savings don’t come at the expense of service, compliance, and public trust.At Wilkins Southworth, we continue to support clients through every stage of their interaction with HMRC – digital or otherwise. Contact us today if you’re unsure how these changes might affect you or your business, because navigating the tax system shouldn’t feel like a guessing game.