Recommendation 19

HMRC originally expected that Making Tax Digital would reduce the burden of submitting tax returns on customers. In June 2023, the NAO reported that HMRC now forecast that complying with the programme will create additional costs for customers, and that it had significantly understated these costs in its cost-benefit analysis in recent business cases seeking further investment in the programme.44 In 2021, HMRC published research that showed that upfront transitional costs for Self Assessment customers with incomes above £10,000 would be around £1.4 billion, and net ongoing costs would be around £150 million a year. HMRC excluded £1.5 billion in upfront transactional costs for Self Assessment and VAT customers in its cost-benefit analysis for its May 2022 business case seeking further investment for the programme. It also excluded upfront transitional costs of £640 million in its 2023 business case.45