The results of a survey conducted by the CIOT and ATT about Making Tax Digital (MTD), strengthens the tax bodies’ shared view that the project is far from achieving its goals.
The Government promotes MTD as part of its plans to ‘make it easier for individuals and businesses to get their tax right and keep on top of their affairs’, while also claiming it will reduce the tax gap by minimising avoidable errors.
The online survey was open to businesses and agents with an interest in MTD. The questions explored opinions about the implementation of MTD for VAT and the future of the whole programme.
There were 1,091 responses to the survey – it was found that the costs of complying with MTD for VAT have so far been significantly above HMRC estimates, and that generally it is not reducing mistakes.
The survey results have led CIOT and ATT to call jointly for a comprehensive review of the roll out of MTD for VAT before HMRC goes ahead with plans to roll out digital reporting obligations more widely.
Tina Riches, Chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, said, “These initial results underline our concerns that, far from bringing benefits to businesses and the Exchequer, MTD for VAT has so far created additional, costly obligations for most businesses beyond what was predicted by HMRC.
“The results suggest there is a very long way to go to achieve the benefits claimed by the Government about MTD for VAT. The Government should undertake a detailed review of MTD for VAT, and determine any benefits, before rolling out MTD more widely.
“Appropriate software can, when used properly and in accordance with a business’s needs, deliver significant benefits. But our survey demonstrates that MTD is not currently delivering those benefits to businesses, nor likely to reduce the tax gap. A thorough review and further consultation is needed before extending its scope.”
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