Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Rejected
Taxpayer and agent representatives raise concerns over Making Tax Digital's increased burdens and costs.
Conclusion
We received written evidence from taxpayer and agent representatives that expressed their concerns over the additional burdens that Making Tax Digital would impose on businesses and taxpayers. For example, Crundell & Co Accountancy Ltd told us that Making Tax Digital for VAT increased administrative burdens and cost to taxpayers and agents. It said that it believed the programme for VAT and Self Assessment was not workable and would not provide any tangible benefit for customers. It also told us that the programme will move tax specialists and their clients from a simple system of submitting one income tax return per year to a system of submitting four quarterly updates, an adjustment and then final submissions which will add unnecessary complication and administrative burden for small businesses, make them less productive and increase their costs significantly.23 Rossmartin Tax Consultancy Limited similarly told us that the programme’s requirements for VAT businesses was adding additional burden to their agents. It said it was now doing more bookkeeping than ever before and was charging for the service, but it was “low margin and time consuming”. It also said, “there is always the added pressure that there will be an IT failure at critical deadlines”.24
Government Response Summary
The government rejects the committee's observation regarding additional burdens, stating its priority to make tax easy must balance with raising revenue and tackling the tax gap. It highlights regular engagement with taxpayer representatives and enhanced policy processes to consider taxpayer experience.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. A priority for government is to make it easy for taxpayers to get tax right. However, it needs to balance several objectives for the tax system, including raising revenue and tackling the tax gap. While these often align, there can be trade-offs to consider. HMRC regularly engages a range of taxpayer representatives, including the Administrative Burdens Advisory Board (ABAB), as new services are developed and to better understand issues faced by taxpayers. ABAB provides valuable insight, including on MTD for ITSA, where its views were important in informing the announcements made in the 2023 Autumn Statement. HMRC has also established an expert panel to consult on digital improvement ideas which provides insight into how to implement changes and provide the right support for vulnerable or digitally excluded customers. As part of HMRC’s governance, the Customer Experience Committee, which includes independent expert advisers, provides advice on customer-experience issues. HMRC shares plans for digital improvements with this committee. The government has recently enhanced existing processes which support policy and service delivery, ensuring these consider improving taxpayers’ experience. This includes improving training and internal guidance for policy officials; introducing checkpoints in the policy making process where senior officials review measures from a simplification and customer experience perspective; and ensuring advice to ministers sets out how a measure contributes to making the tax system simpler, fairer or supports growth. HMRC also runs research programmes to build understanding of customer needs, publishing analyses of impacts on individuals and businesses in Tax Information and Impact Notes (TIINs).