MPs on the Public Accounts Committee ( PAC ) criticize the department for failing to be open about the increased costs the program is imposing on taxpayers and have little faith in the timely delivery of the HM Revenue and Customs ( HMRC ) Making Tax Digital ( MTD ) program.
Initially scheduled to be finished by 2020, the program, which aims to digitize the UK tax system, was  . The timeline for finishing MTD has, however, been repeatedly rephased and moved by the department.
HMRC started rolling out MTD on April 1st, 2019, nbsp, but just for VAT returns for companies with deductible turnovers greater than £85,000.
Three years prior, in 2016, HMRC had predicted that by 2020–21, more tax revenue of £600 million per year would be generated by VAT returns, MTD for , and Self Assessment, the latter of which was actually scheduled to launch in 2018.
But, a report from the PAC states that by 2023, there were only 137 participants in the pilot testing for self-evaluation, which is far short of the department’s goal of 15,500 participants. According to HMRC, it wo n’t be possible to complete the first stage of the program’s self-assessment component until at least 2026.
According to the report, “widespread and repeated failures” in the department’s planning, design, and delivery of the program are to blame for the “repeated delays to Making Tax Digital” that have significantly delayed the benefits and increased costs.
More than £640 million in taxpayer money has been spent on the program over the course of its seven years of operation, which the PAC deemed “unacceptable” given that” but many questions remain about how MTD for Self Assessment will work.”
HMRC is still in the early stages of developing its plans for self assessment, seven years in. According to the report, it has not yet figured out how to make the program work for crucial components, such as how the system will support taxpayers with various agents and how it will function for those who share property ownership.
According to the report, the department has also failed to disclose costs to taxpayers in an open manner. According to its most recent business cases, complying with” the new arrangements over the first five years, and HMRC has never said how many and which customers will face the highest intermediate costs” could cost business tax payers more than £1.9 billion.
Making it simpler for people to get their taxes correctly and lessening the burden on tax payers was the primary goal of MTD. Nonetheless, the report claimed that it has made the burden heavier.
Taxpayers will be asked to spend more money and take more action to comply, even though Making Tax Digital will significantly benefit HMRC by improving its systems, according to the report.
” HMRC is increasing the burdens it imposes by asking Self Assessment taxpayers to pay for third-party software and file tax returns quarterly,” despite having lost sight of its original goal of relieving taxpayer burden.
The committee is worried about how much the program might cost consumers, the PAC report added.
Meg Hillier, the chair of the PAC, stated that it should n’t be the committee’s responsibility to advise HMRC to start with what the taxpayers need when “reporting on proposals for digitizing the tax system.”
One would hope that this would just go unnoticed in an appropriate world, she continued.  ,” We are concerned that HMRC is even succeeding in making tax hard after seven years and £640 million into the Making Tax Digital program.
It could not be less welcome to place substantial extra burdens on customers in the midst of a cost-of-living crisis. HMRC must presently look beyond its current operations and conduct research on the services that customers would really find most beneficial.
” We are also worried about the high taxes that will be levied against some taxpayers. Coming transparency on costs and benefits must be unassailable because HMRC’s exclusion of billions of pounds of projected costs when seeking investment for the program is completely remarkable.
The department’s progress on MTD has been criticized in a number of reports, including this one. The National Audit Office ( NAO ) reported earlier this year that the program’s ongoing delays and modifications have damaged its credibility, and a previous PAC report forewarned taxpayers in 2020 that MTD could impose , unreasonable costs &nBSP.
