Recommendation 32

We were concerned about the impact of Making Tax Digital on the smaller taxpayer, such as a retired person with rental income from one property. We noted that other administrative tax changes, such as on-line self-assessment, have not provided expected benefits to taxpayers because of problems with software.58 We pointed out that it felt like Making Tax Digital might lead to small taxpayers serving HMRC rather that HMRC serving them.59 We asked HMRC how Making Tax Digital would benefit small taxpayers. HMRC noted that its evaluation suggested that VAT traders found that Making Tax 50 Qq 120, 125–126 51 Q 131 52 C&AG’s Report, para 1.32 53 HMRC, HMRC quarterly performance report: July to September 2021, November 2021 and HMRC, HM Revenue and Customs Outcome Delivery Plan: 2021 to 2022, July 2021 54 C&AG’s Report, paras 2.28, 2.31 55 HMRC, Policy paper Extension of Making Tax Digital for Income Tax Self-Assessment to Businesses and Landlords, 23 September 2021 and HMRC, Guidance Using Making Tax Digital for Income Tax, October 2021 56 Q 54 57 Qq 61–62 58 Qq 56–57, 65 59 Q 62 18 HMRC Performance in 2020–21 Digital had made dealing with their tax affairs easier. HMRC also pointed out that self- employed taxpayers with income under £10,000 a year would not be mandated to be part of Making Tax Digital.60