Parliament’s Public Accounts Committee (PAC) has said it is not clear what benefits people with simple tax affairs gain from the Making Tax Digital programme.
It has made the point within a report on HM Revenue and Customs’ (HMRC) accounts for 2020-21.
Making Tax Digital has been phased in since 2019 and now applies to most businesses, with a requirement for taxpayers to keep records and submit quarterly returns to HMRC digitally.
By 2024 it will apply to small landords and sole traders with business and/or property income over £10,000 per year, with the aim of making the returns easier and providing better data to the departments.
But the PAC report says the benefits to those with the most straightforward tax affairs, such as a retired person with rental income, are far from clear. This is creating a perception that the programme could lead to such people serving HMRC rather than vice versa.
Software doubts
In addition, there is no guarantee the software they will need will be readily available or easy to use, even though HMRC is confident this will be the case.
“We question the value of asking the large number of taxpayers with simple tax affairs to take on additional costs and reporting,” the report says.
It recommends that HMRC should explain in its Treasury Minute response how the programme will make things easier and less costly for this group of taxpayers.
The PAC report comes shortly after HMRC published its own research saying that small businesses have so far had mixed experiences in using the Making Tax Digital service.
In November of last year the National Audit Office said the programme is on course to have higher costs but also raise more revenue than originally expected.
The report notes that HMRC has indicated that taxpayers with an income below £10,000 per year will not be mandated to take part.
