Author: Rufus
Posted: 13 January 2012, 14:18:25

Almost six years ago (that’s about 40 years for me) I wrote an article called Pavlovian tax, which pointed out that if you give an incentive – corned beef tends to work for me, but cash seems the usual human factor – then you can pretty much get people to do what they want.

The online PAYE filing incentive was the case in point. HMRC estimated it would cost about £250 million, but the offer of a couple of hundred quid meant that it ended up costing about £1 billion.

Looks like a couple of American’s must have read my article, because they have had great success with a book, Nudge, explaining that an incentive can be cost-effective in getting the punters to do what you want them to.

HMRC have read this book and seem to have realised it’s probably a good idea to put an upper limit on how much the incentive is going to cost.

Procrastination isn’t a trait that afflicts us dogs. We know that the postman will come round again tomorrow, and even the day after, but that doesn’t mean that we’re going to pass up the chance of giving him the fright of his life today.

Your average human on the other hand, would probably just say, ‘I’ll do my barking tomorrow – or maybe the day after. Where’s the TV zapper?’ This is exactly the attitude they take to filing their tax returns, which is why HMRC seem close to deciding to incentivise them with a £100,000 prize.

Apparently, about 75% file online, but the department would like this done earlier in the year to avoid the cost of additional staff having to chase the returns and tax payments of those procrastinators who leave things too late.

HMRC say they haven’t made a final decision on a prize draw for early filers, but that they do spend ‘many millions of pounds in additional costs dealing with those taxpayers who don’t fulfil their obligations... a prize draw could increase numbers filing their tax return online early and encourage people to pay their tax on time, resulting in increased efficiencies for HMRC’.

One thing they definitely have to consider is a subject close to Dave Hartnett’s heart: taxpayer confidentiality. Could they announce the winner’s name and address?

The Dog House blog

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