Source · Select Committees · Public Accounts Committee
Recommendation 33
33
We asked about the support and software that would be available to small taxpayers.
Conclusion
We asked about the support and software that would be available to small taxpayers. HMRC said it was gearing up to support customers but that it would not be delivering software itself. Nevertheless it had received pledges from industry that they would, as they did for VAT, provide free-at-point-of-service software for those taxpayers with the most simple needs.61 HMRC said the software industry had plenty of time to act on user research and get software right by 2024.62 HMRC’s estates strategy
Government Response
Not Addressed
HM Government
Not Addressed
7: PAC conclusion: The benefits of Making Tax Digital to those with simple tax affairs are not clear. 7: PAC recommendation: HMRC should, in its Treasury Minute response, explain how the introduction of Making Tax Digital will be made easier, and less costly, for taxpayers with the simplest and most straightforward tax affairs. 7.1 The government agrees with the Committee’s recommendation. Recommendation implemented 7.2 Research conducted by HMRC and peer reviewed by independent academics indicates that Making Tax Digital (MTD) for VAT is likely to have generated Additional Tax Revenue (ATR) of a similar magnitude to the Autumn Budget 2021 OBR-certified forecast for 2019-20 of £115 million HMRC have worked hard to minimise the costs and maximise the benefits of MTD. The government’s commitment to free software for the MTD Income Tax Self-Assessment (ITSA) service for those with the most straightforward affairs is central to this, removing one of the financial barriers to participating in MTD. 7.3 A study of 2,005 businesses in the VAT service, found the majority reported the transition to Making Tax Digital (MTD) was easy and that they experienced benefits from MTD. 7.4 The government expects users of the MTD for ITSA service will experience similar benefits. While they will provide more updates to HMRC under MTD for ITSA, they are likely to save time through not having to make as many amendments at the end of the year. 7.5 Small businesses make the greatest number of errors contributing to the Tax Gap and account for the largest proportion of ATR that the government expects to see from MTD for ITSA. 7.6 The government understands that the transition to MTD will not be easy for everyone. Working closely with stakeholders, HMRC will continue to improve the support offering to those who may be unrepresented or less digitally capable and provide exemptions for those who cannot go digital.