Source · Select Committees · Public Accounts Committee
Recommendation 30
30
Acknowledged
Repeated delays to Making Tax Digital programme undermine software provider confidence and investment
Conclusion
We asked the Department if it accepted that the changing timeline of the programme undermined those who were developing a business around the requirements of the programme. HMRC recognised that the repeated delays to the programme’s delivery had been unwelcome and had knocked confidence in the programme among those in the software industry. HMRC said it was working very closely with the software providers to give them as much certainty as possible so they could continue to develop products and create a healthy marketplace. HMRC acknowledged that the sooner it could agree the design for the Self Assessment programme, the easier it would be for software developers to start developing the software. HMRC recognised that providers would not build the software until there was more progress with the design. APARI Software Ltd, told us that Making Tax Digital for Self Assessment required significantly more investment from software providers than the VAT part of the programme. APARI Software Ltd explained that the programme’s dependency on the software market meant that repeated delays 67 Qq 40, 81–83, 86, 89, 92 68 Qq 38, 80; C&AG’s Report Figure 8 69 Qq 49, 50; PTD0014, Written evidence submitted by APARI Software Ltd, 19 June 2023 70 Q 49; C&AG’s Report, para 3.28 and Figure 9; PTD0014, Written evidence submitted by APARI Software Ltd, 19 June 2023 71 PTD0014, Written evidence submitted by APARI Software Ltd, 19 June 2023 Progress with Making Tax Digital 21 could lead to the programme failing if the commercial opportunity Making Tax Digital was expected to provide did not justify the major investment required by the software industry.72
Government Response Summary
The government agrees with the conclusion, recognising the importance of certainty for MTD delivery partners and customers. It highlights the December 2022 announcement of the phased MTD for ITSA timeline, ongoing detailed planning and roadmap sharing, and continued engagement on communication plans, with further messaging planned for April 2026.
Government Response
Acknowledged
HM Government
Acknowledged
5.7 The government agrees with the Committee’s recommendation. Target implementation date: April 2026 5.8 Making Tax Digital is central to the delivery of a digital and modernised tax administration system. The government recognises that HMRC’s customers and delivery partners need certainty and assurance over the delivery plan for MTD. 5.9 The government announced the phased mandation timeframe of MTD for ITSA in December 2022. This announcement recognised the significance of these changes to HMRC, taxpayers and delivery partners - alongside the challenging economic environment facing small businesses. It was also informed by HMRC’s detailed internal planning. 5.10 Following the announcement of the outcome of the small business review in November 2023, HMRC has also shared detailed plans and a delivery roadmap with key external partners involved in the delivery of MTD. 5.11 HMRC has also sought feedback on its communications plans from agent representative bodies, software developers and tax agents and will continue to do so alongside sharing key messages and assets where available. Short-term plans are focussed on supporting software developers, agents, self-employed people, and landlords to take part in beta testing. 5.12 As April 2026 approaches, additional messaging will be introduced to encourage those outside of testing to prepare for the new requirements. 5.13 The government will ensure that any future decisions that affect customers or delivery partners – such as any future decision to amend the income threshold for mandation into MTD – provides adequate time for all parties to prepare.