Progress with Making Tax Digital
Executive summary
- HMRC must set a definitive timeframe for the roll-out of Making Tax Digital (MTD) and stick to it. The successive delays have dented business confidence in the programme and provided significant uncertainty. It is imperative that MTD is implemented with no further delays.
- Digitisation does not always equate simplification and there should be greater independent oversight on HMRC to ensure it is pursuing true tax simplification. The abolition of the Office for Tax Simplification was a retrograde step. There should be more independent oversight to ensure that HMRC simplifies complex tax processes, rather than just digitising them.
- There have been some successes with MTD and AAT has identified significant appetite for greater intermediary involvement and support for the registration process. An overwhelming 95% of AAT Licensed Accountants surveyed last year expressed a desire to register their clients for MTD for ITSA.
- HMRC must invest in building greater awareness of MTD among small businesses. Last year, 85% of AAT Licensed Accountants believed the ITSA registration process was not well understood or only understood with the help of an accountant or other professional.
- HMRC must properly resource its customer services. Customer service levels have declined to a point that it is severely disrupting businesses and ultimately hampering progress with MTD adoption.
- There is an increasing risk that MTD could be outpaced by technology if there were any further delays. HMRC must not continue with the status quo but use the additional time to get the pilot running as soon as possible and adopt an approach of co-creation with software vendors and small businesses.
- HMRC should produce more information on how it will support the digitally excluded following implementation of MTD. There will be taxpayers who will never be able to go digital. HMRC has recognised this, but we would welcome more detail on what specific support they will offer this vulnerable group.
Related consultation responses
Spring Budget 2024 representation
This representation ahead of the March 2024 Spring Budget sets out AAT’s policy position on tax, professional standards, support for SMEs and late payments.
Making Tax Digital for Corporation Tax
We think practical benefits are likely, but while a reduction in errors is possible in the medium to long term, they may increase in the short term.
