International best practice in tax communications: Ernst and Young Research

1. Introduction and definition of tax engagement

This report has been commissioned by the Scottish Government and prepared by the Ernst & Young LLP. It reviews national and regional taxpayer engagement and communication for maximising taxpayer awareness, involving analysis conducted using a range of different information sources. The report does so by:

• Developing a conceptual framework for tax awareness communications based on the literature and approaches taken by other countries for increasing tax awareness.
• Identifying some barriers to achieving best practice.

The report focuses on communication of taxes that are equivalent to those that are fully or partially devolved to the Scottish Government.

1.1 Background and drivers for this report

The Scottish Government’s Tax Strategy, published in December 2024^[1], committed to publishing “the findings from externally commissioned research on international best practice on tax communications and engagement” in Spring 2025. This report constitutes the findings from that research.

This work has been driven by various longer-term influences. The Scottish Government’s Framework for Tax 2021 (the Framework) outlines principles and strategic objectives that the Scottish Government aims to achieve within the tax system and policymaking. The Framework establishes the importance of instilling a positive public image of the role of tax in funding public services within Scotland, and includes a principle specifically for engagement with taxpayers:^[2]

“Engagement: People and businesses should be able to understand the tax system and governments and tax authorities play a critical role in relation to that. Governments must therefore be open and transparent about tax policies and their decision-making, consulting as widely as possible. This is crucial for accountability and trust.”

This principle recognises the importance of consultation and engagement by the Scottish Government with Scottish taxpayers. Furthermore, the Framework states that the Scottish Government will achieve engagement by:^[3]

1. Communicating clear tax messages

2. Connecting with a wide range of stakeholders

3. Creating opportunities for tax policy engagement

The Scottish Government set up a Tax Advisory Group, whose terms of reference are to provide strategic advice on tax policy and strategy to the Scottish Government, including^[4] to “support the development of a strong network of voices involved in tax policy debate, supporting public understanding of tax”.

The Scottish Government annual surveys gauging public attitudes towards paying taxes and understanding of the tax system indicate that, in 2024, 57% of respondents felt that they understood the UK tax system, and only 42% felt they understood tax devolution in Scotland.^[5] Commentators have also noted that Scotland’s devolved taxes are “complicated and not always clearly understood”.^[6] There is a recognition of the importance of an improved understanding to sustaining the trust and engagement of the public.^[7]

1.2 The research question

Based on the above, the Scottish Government has commissioned this report to consider:

What best practice approaches and methods for tax engagement and communication can Scotland use to engage more effectively to maximise awareness and understanding of the complex tax landscape in Scotland and key tax policy concepts?”

For the purposes of this report, the elements of this research question are interpreted as set out below:

• Approaches and methods for tax engagement and communication: Tax engagement and communication is a broad category and, for the purposes of this paper, ‘tax communication’ is defined as “a variety of methods to get in touch with taxpayers to convey tax-related information”.^[8] This includes traditional approaches, digital and social media, individualised taxpayer communications, taxpayer education, and systems and processes for including seldom heard groups.
• To maximise awareness: Taxpayer engagement and communication can span four areas (awareness, engagement, assistance and education). This paper focuses on communication aimed at raising tax awareness, which tends to be one way communication by the government, rather than the two-way process of communication involved in the collection of feedback or citizen response, provision of taxpayer assistance on specific issues or process involved in any taxpayer education.

Types of communication

Taxpayer awareness

• One-way communication of information by the tax authority or government to raise awareness of target groups.
• Examples:
• Information awareness campaigns
• Building a more positive appreciation by taxpayers
• Tailored messaging

Taxpayer engagement

• Two-way process of engagement with information flows and/or feedback from taxpayers to the tax authority
• Examples:
• Specific consultation processes
• Community consensus building

Practical taxpayer assistance

• Communication with individual taxpayers relating to taxpayer disputes, compliance advice, taxpayer queries

Taxpayer education

• Educational programmes that provide more detailed in-depth information

The content of tax awareness can be varied. Though this paper does not focus on the specific content of a tax communication, examples might include:

• Broad information campaigns which may:
• Improve taxpayer knowledge of the tax, spending and budget processes and concepts and therefore increasing government accountability
• Increase taxpayer understanding of how the tax system works
• Tailored campaigns focused on specific taxpayer groups that may:
• Increase taxpayer capacity to manage their own tax affairs
• Increase taxpayer compliance and therefore revenues
• Understanding of the complex tax landscape in Scotland and key tax policy concepts: This paper focuses on tax communications related to general tax policy and broader tax policy concepts. It does not cover communications related to providing assistance on taxpayer specific issues such as engagement to support individual taxpayers in their specific compliance advice, queries, or where questions become a dispute. It therefore covers:
• Communications that build trust and transparency about tax, spending and societal benefits
• Communications that support and improve community engagement and consensus with tax policy decisions, including those that provide general information about tax policy decisions and their rationale
• Communication of general underlying tax policy concepts and the impact of devolution on these concepts, for example:
• The nature of progressive tax, tax brackets and rates
• The role of tax and taxpayer compliance on budgets and the delivery of services
• General budget concepts such as revenue, deficit, borrowing, forecasts
• The roles of the Scottish Government and UK Government in Scottish Tax
• Best practice: This report identifies, best practice based on literature review and desk research, and considers practices used in several specific agreed jurisdictions that might be relevant to Scotland.
• Engage more effectively: How effectiveness is measured varies and is discussed as part of the report. Effectiveness for the purposes of this report is based on increased tax awareness and the understanding of citizens and target groups.

1.3 Structure of this report

This paper is set out as follows:

• Chapter 1: This background and introduction including articulation of the key research questions
• Chapter 2: Key findings from literature review and select country analysis
• Chapter 3: Designing a strategy for effective taxpayer awareness
• Chapter 4: Consolidated approach to providing a foundation and process for tax awareness communications
• Appendices: To cover abbreviations, bibliography, and any further detail