Select committee: Public Accounts Committee
Conclusion 32
23rd Report - The cost of the tax system
Published 30 Apr 2025
Addressed to HM Treasury
Public Accounts Committee The cost of the tax system All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
We asked HMRC why MTD will increase the burdens on self assessment business taxpayers. It told us the costs MTD will impose on a business will vary depending on the degree to which they already used business accounting software. Those that currently do not use business accounting software will face higher costs but their digitalisation through MTD should increase their productivity as well as their tax compliance. HMRC said MTD would generate £4 billion of additional tax revenue by 2029–30 as a significant number of taxpayers had not been complying. We asked why customers who were already compliant were facing an additional burden from MTD. HMRC explained that “the approach that we and successive 58 Committee of Public Accounts, Progress with Making Tax Digital, Eighteenth Report of Session 2022–23, HC 1333, 24 November 2023, p 3 59 C&AG’s Report, para 3.15 60 C&AG’s Report, para 3.15 61 HM Treasury, Autumn Budget 2024: Fixing the foundations to deliver change, HC 295, October 2024, para 5.21 62 Correspondence from HMRC, 19 March 2025 63 Qq 72–73 64 Correspondence from HMRC, 19 March 2025 18 Governments have adopted is one of a universal drive to encourage small businesses to improve their record–keeping and to improve their use of software.” 65
From: Public Accounts Committee, 23rd Report - The cost of the tax system (HC 645), 30 April 2025
Government response
The government responded to the whole report on 18 September 2025.
Summary written by Accountability Index from the government's response. It is not the government's own words.The government states that it "agrees with the Committee's recommendation" on each of the report's recommendations, and reports that several are already implemented while others carry target dates.
- On simplification, the government will publish HMRC's Transformation Roadmap in summer 2025, which "will include the metrics HMRC will use to report progress".
- On trust, the government agrees with both recommendations and describes them as "Recommendation implemented", citing annual customer surveys, complaints data and focus groups.
- On compliance productivity, it says HMRC "will recruit an additional 5,500 compliance staff by March 2030", alongside other measures to close the tax gap.
- On legacy IT, HMRC "will write to the Committee" on its remediation plans, forecast cost and expected savings, with a target implementation date of September 2025.