HMRC's Making Tax Digital scheme made tax more expensive
Briefly

The UK's push towards digitizing tax services through 'Making Tax Digital' (MTD) has led to significant unintended costs for taxpayers. According to the Public Accounts Committee, the initiative, which commenced a decade ago, lacked adequate consultation, resulting in businesses incurring unexpected expenses. From 2020 to 2024, MTD for VAT is expected to cost around £300 million, and the transition of self-assessment tax could exceed £500 million in costs. The PAC criticized the lack of productivity evidence from MTD and noted substantial expenses incurred by HMRC in modernizing its outdated IT systems.
"There is no strong evidence to date to suggest productivity improvements or other benefits for most VAT traders following the introduction of MTD," the PAC report said.
In total, HMRC's digital business group incurred £785 million ($1 billion) in costs during 2023-24, the most recent financial year reviewed by the Public Accounts Committee.
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