letters MTD with clipboard and pen

Tax bodies call for review of digital tax project

24 November, 2023

In the light of today’s Public Accounts Committee (PAC) report on “Progress with Making Tax Digital”1, HMRC need to undertake an urgent review of the Making Tax Digital (MTD) programme, say the Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT).

This review should consult on MTD’s future direction and delivery, including carrying out a fresh evaluation of the impact of the project on the ‘tax gap’.

Christopher Thorpe, CIOT technical officer, commented:

“The execution of this major change to the tax system feels like it is out of control, with spiralling costs, unrealistic timescales, and questionable benefits. While we support digitalisation, today’s report backs up our concerns that HMRC have vastly underestimated costs to taxpayers and overestimated benefits to the exchequer.

“We agree with HMRC that a significant amount of tax goes uncollected because of errors and a failure by a minority of taxpayers to take reasonable care, and we support efforts to reduce all aspects of the tax gap. However, we remain unconvinced that MTD will achieve this aim, or bring substantial efficiencies to businesses and HMRC in its planned form.”

Emma Rawson, ATT technical officer, explained:

“The proposals as they stand are likely to lead to a further deterioration in HMRC’s already poor service levels, especially if MTD for Income Tax is launched as planned in 2026 before it is fit for purpose.

“The current approach needs a rethink. That is why ATT and CIOT have written to the Financial Secretary to the Treasury2 encouraging him to launch a review of MTD, including detailed consultation on its future direction and delivery, with a full assessment of its impacts and benefits. This should include - as the PAC recommends - HMRC undertaking and publishing a robust assessment of how much difference to tax revenue will be made by the two elements of MTD – more frequent submissions of taxpayer data and digital record-keeping.

“While the Autumn Statement announced easements regarding some of the requirements, we are disappointed that the opportunity to re-evaluate the entire project was not taken.”

Notes for editors

  1. Progress with Making Tax Digital, Public Accounts Committee, 24 November 2023.

  2. Making Tax Digital – CIOT and ATT letter to FST.