Source · Select Committees · Public Accounts Committee
Recommendation 31
31
Acknowledged
HMRC concern over MTD delays limiting software providers and creating taxpayer barriers
Conclusion
We asked HMRC if it was concerned repeated delays would limit the number of software providers willing to develop products for taxpayers, and whether this could create a barrier for taxpayers using the programme. It told us it was worried about this, and it recognised that the announcements in December had clearly added to this risk. HMRC accepted that the sooner it could provide certainty about the size of the population and the requirements, the sooner it could mend the fences with the industry and make progress with increasing the software on offer.73 The Business Application Software Developer Association (BASDA), the trade body for software developing companies in the UK, explained that software companies cannot continue to plan with continued uncertainty and had already spent millions in developing existing product with no customers.74 Both the Institute of Charted Accountants in England and Wales (ICAEW) and APARI Software Ltd told us that some software providers had already cancelled their plans to develop products for the Self Assessment programme because of the most recent delays.75 BASDA also told us that they had repeatedly raised concerns with HMRC and HM Treasury over the past few years, and in August 2022, wrote an escalation letter to HMRC’s senior leadership team citing concerns over five key areas. These were commerciality, communication, regulatory/policy, technology, and testing. BASDA told us that it wrote a further escalation letter in November 2022 asking for full and timely engagement and clarity, given the further diminishing confidence in the programme among the developer community. BASDA also told us that the delays and descoping announced by HMRC in December 2022 were devastating to invested members of the software industry and recommended a lessons learned exercise with the software developer industry to ensure that the programme would be best set up to succeed in future.76 HMRC recognised that the software markets’ confidence and willin
Government Response Summary
The government agrees with the conclusion, acknowledging the need for certainty and assurance for MTD delivery partners and customers. It outlines the December 2022 announcement of the phased MTD for ITSA timeline, ongoing detailed planning and roadmap sharing, and continuous stakeholder engagement on communication plans, with a focus on preparing 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.