Progress with Making Tax Digital

Testing the options and design. a) Prepare a separate business case for Making Tax Digital for Self Assessment so that decision makers can understand the costs and benefits (excluding those already incurred or secured) and delivery risks for the full range of options. This should include greater clarity on how different groups of business taxpayers are affected.

On delivery g) Reassess its existing delivery plan to test whether it is realistic and offers the best value for money. In particular HMRC should: ? work with software providers to agree an approach for the pilot. Working through the more complex cases first may offer the best value for money and reduce the total cost for the programme; ? review its approach to moving taxpayer records from legacy systems and consider whether it needs more time and resources to cover this element; ? model the cost and time sensitivities around the plan to identify the areas of greatest risk and ensure the plan contains sufficient contingency; and ? use projections of further cost as a trigger to assess the continuing viability of the programme, should these threaten to outweigh the benefits

l) Review all its major programmes that are imposing costs on taxpayers and ensure it has correctly accounted for these costs when assessing the programmes? economic benefits and financial affordability

i) Develop an end-to-end plan with the detail that delivery partners need and work with software developers on the sequence of work and testing that will be most likely to achieve value for money

m) Review with HM Treasury how additional tax revenue from reduced fraud and error can be included in business case analysis so business cases for MTD and other HMRC programmes aiming to reduce fraud and error can provide decision makers with a clear view of all benefits and costs. The benefits of reducing fraud and error have been central to analysis for business cases prepared elsewhere in government.

b) Identify and challenge whether each discrete element of the programme merits inclusion. Tests should include whether the change is: business critical or offers a benefit-cost return; meets the policy objectives of the programme; cannot be done better another way; and can be delivered with confidence.

j) Develop plans for how it will help taxpayers prepare for MTD. This should include a particular focus on those who are less digitally able and ensure the process for seeking exemptions is sufficiently accessible.

c) Reassess what scope the move to a modern tax management platform offers for: achieving additional tax revenue from improved controls and risk assessing of claims; greater efficiency gains; and benefits to business taxpayers by offering a more streamlined service. Consideration of the value for money of alternative options should include the full costs to both HMRC and customers.

h) Seek independent technical assurance of its plans and monitor progress closely throughout. It should develop robust metrics to report progress against

d) Resolve questions of design and the mechanics of the Self Assessment regime as a strategic priority. HMRC can learn from its success in resolving design issues quickly when implementing the COVID-19 support schemes by bringing together those with expertise in policy, tax, IT and operational delivery (including delivery partners). For MTD and other digital programmes it should develop and test the concept iteratively before committing to large-scale projects or finalising deadlines

e) Ensure it follows through on its public commitment to work collaboratively with stakeholders on how best to create the new system. HMRC changed its approach in early 2023 and must now work with stakeholders and relevant experts to quickly address the specific unresolved design issues, including how HMRC?s systems will allow for taxpayers with different year-ends or jointly-let property, or those represented by multiple agents, and develop and test how the arrangements would work in practice for taxpayers, their agents and HMRC

On appraising MTD and other programmes k) Investigate how incomplete and inaccurate information on upfront transitional costs to customers was presented in programme business cases and take any necessary corrective action

f) Resolve questions around the choice of accessible software options and provision of free software, for self-employed people and landlords under Making Tax Digital and assess the implications on functionality and costs to customers if HMRC relies on software providers to deliver all MTD software, including for the smallest businesses with the most straightforward affairs. HMRC must establish the costs and time required if it needs to develop or procure its own software, and assess these alternative options in the business case.