MPs warn MTD has lost sight of taxpayer benefits

MPs have raised issues regarding Making Tax Digital (MTD), once more expressing concerns about its rising cost, delays, and feasibility. They’ve argued that HMRC has lost sight of the need to make taxpayers’ interests the priority within the ongoing system overhaul, and are making the forthcoming process more challenging than previously.

The Government introduced a series of adjustments, concessions, and commitments during the Autumn Statement, with the most notable being the decision not to extend MTD for Income Tax to individuals earning less than £30,000 in the foreseeable future.

The Public Accounts Committee (PAC), composed of MPs from various parties responsible for evaluating the cost-effectiveness of government initiatives, recently released a report on the project. This report highlighted HMRC’s shortcomings in planning, design, and implementation of MTD, resulting in both cost overruns and project delays.

Dame Meg Hillier, the committee’s chair, expressed her concerns, saying, ‘Our committee should not have to recommend that HMRC prioritise taxpayers’ needs when proposing to digitise the tax system. However, after seven years and £640 million invested in Making Tax Digital, we are apprehensive that HMRC is inadvertently complicating the tax process.’

Despite its initial goal of reducing the burden on taxpayers, the PAC’s “Progress with Making Tax Digital” report raised concerns about the additional costs and obligations that MTD will impose on taxpayers. The report noted, ‘HMRC has lost sight of its original objective to ease the taxpayers’ load, as it now requires self-assessment taxpayers to purchase third-party software and file quarterly tax returns.’

Furthermore, the report accused HMRC of not being transparent enough about the extra expenses for software and training that MTD would entail for many taxpayers. Although HMRC’s research suggested an average upfront cost of £330 for taxpayers complying with MTD, with some facing costs approaching £1,000, the PAC claimed that HMRC had excluded more than £2 billion in transitional expenses from two business cases requesting additional funding for the programme.

As ever, we’ll continue to keep you informed of any future updates and adjustments related to Making Tax Digital (MTD). It’s possible that more changes or delays could follow. If you have any questions in the meantime, please get in touch, otherwise, watch this space!