Tax digitalisation programme delivery
Concerns among stakeholders regarding the deliverability and benefits of the Making Tax Digital (MTD) programme.
358 items
6 sources
2 inquiries
Strongest theme matches
Mixed across source types and ranked by classifier confidence plus text match strength.
Committee recommendation
100match
#28 - Making Tax Digital increased VAT trader costs without demonstrating clear productivity improvements.
HMRC launched its flagship transformation programme Making Tax Digital (MTD) in 2015–16. MTD requires business taxpayers to use third–party software to keep and submit quarterly digital tax records with the aim of: reducing the amount of tax lost from taxpayers making avoidable or careless errors; helping businesses better understand their tax position; and reducing the burden of submitting...
Matched on
terms: digitalisation, programme, tax
Committee recommendation
86match
#32 - HMRC expects MTD to increase taxpayer burdens to enhance compliance and productivity, generating revenue.
We asked HMRC why MTD will increase the burdens on self assessment business taxpayers. It told us the costs MTD will impose on a business will vary depending on the degree to which they already used business accounting software. Those that currently do not use business accounting software will face higher costs but their digitalisation through MTD should...
Matched on
terms: digitalisation, tax
Committee recommendation
81match
#32 - Thirty-Seventh Report - HMRC Performance in 2020–21
We were concerned about the impact of Making Tax Digital on the smaller taxpayer, such as a retired person with rental income from one property. We noted that other administrative tax changes, such as on-line self-assessment, have not provided expected benefits to taxpayers because of problems with software.58 We pointed out that it felt like Making Tax Digital...
Matched on
terms: delivery, tax
Committee recommendation
81match
#5 - Twentieth Report - Tackling the tax gap
It is not clear that Making Tax Digital will help reduce the tax gap or taxpayer costs at a time when individual taxpayers and small businesses are under considerable pressure. HMRC’s primary objective for the ‘Making Tax Digital’ programme is to help reduce the tax gap attributable to small businesses caused by error and failure to take reasonable...
Matched on
terms: programme, tax
Committee recommendation
78match
#30 - Extending Making Tax Digital to Income Tax Self Assessment will impose significant costs exceeding benefits.
In February 2024, HMRC estimated that extending MTD to Income Tax Self Assessment from 2026–27 would impose transitional costs of around £561 million on sole traders and landlords with incomes above £30,000, and the continuing annual costs of MTD to these taxpayers would exceed the continuing annual benefits by around £196 million.60 In the Autumn Budget 2024 the...
Matched on
terms: tax
Committee recommendation
77match
#15 - Twentieth Report - Tackling the tax gap
HMRC is implementing an ambitious initiative, Making Tax Digital, to help tackle error and failure to take reasonable care, particularly in the small business population. Small businesses accounted for the largest share of the tax gap (£13.4 billion; 43%) in 2018–19.35 They will be required to use accounting software to keep accurate and up-to- date records, and the...
Matched on
terms: programme, tax
Committee recommendation
74match
#29 - Making Tax Digital imposes significant burdens and costs, risking further system complications for taxpayers.
The previous Public Accounts Committee found in 2023 that rather than reducing the overall burden on customers as HMRC had initially expected, MTD was imposing significant additional burdens and costs at a time when many of its customers could least afford it. The Committee concluded that HMRC had lost sight of the need to put taxpayers at the...
Matched on
terms: tax
NAO recommendation
74match
Progress with Making Tax Digital
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...
Matched on
terms: tax
Committee recommendation
73match
#16 - Twentieth Report - Tackling the tax gap
We questioned the Department about the effectiveness of Making Tax Digital in closing the tax gap, particularly in tackling tax evasion. HMRC explained that the programme is not designed to tackle tax evasion by small businesses. Other solutions are required to address the risk of tax evasion. The aim of Making Tax Digital is to reduce the level...
Matched on
terms: programme, tax
Committee recommendation
70match
#12 - Publish baseline assessment of SME tax compliance costs and aim to reduce by 25%.
The Government should publish a baseline assessment of SME administrative costs of complying with the tax system. The Government should aim to reduce the costs of complying with the tax system by 25% by the end of the Parliament, in line with its target to cut regulation. As a first 71 step, it should increase the roll out...
Matched on
terms: tax
Committee recommendation
70match
#11 - Reduce administrative burden and complexity of the tax system for small businesses.
The tax system is becoming more complex. This is generating significant burdens for SMEs, distracting business owners from running their companies, and jeopardising collection of tax revenues. Initiatives such as Making Tax Digital suggest such costs are not adequately appreciated by HMRC and the Treasury. The Government has recognised the importance of reducing the regulatory burden for businesses....
Matched on
terms: tax
NAO recommendation
65match
The administrative cost of the tax system
HMRC should take a whole-system view of the cost-effectiveness of the tax system when making administrative changes or advising on policy changes. HMRC should be clear when it is placing increased requirements on taxpayers or intermediaries about the estimated costs and benefits to each party, and explain the allocative efficiencies from any redistribution of responsibilities. If the burden...
Matched on
terms: tax
Committee recommendation
65match
#31 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC what Making Tax Digital was for. HMRC told us Making Tax Digital was about making tax easier, keeping tax in line with the digital age and making business more productive.56 HMRC also told us that, by providing real time or up-to- date data on taxpayers, Making Tax Digital would help it if it ever needed...
Matched on
terms: tax
Committee recommendation
65match
#7 - Thirty-Seventh Report - HMRC Performance in 2020–21
The benefits of Making Tax Digital to those with simple tax affairs are not clear. The requirement for taxpayers to keep tax records and submit quarterly returns to HMRC digitally is a key part of its 10-year modernisation strategy. From April 2024, HMRC will extend Making Tax Digital to 4.2 million taxpayers with business and/ or property income...
Matched on
terms: tax
Committee recommendation
64match
#15 - Thirty-Seventh Report - HMRC Performance in 2020–21
Given the uncertainties in HMRC’s current estimates of error and fraud in R&D relief claims, we asked HMRC what it was doing to improve its estimates. It told us that it was planning a random enquiry programme for R&D claims which will inform its estimate. We expressed our concerns that HMRC was not on top of the abuse...
Matched on
terms: programme, tax
NAO recommendation
61match
Managing tax compliance following the pandemic
[HMRC should:] assess the potential impacts, on taxpayer behaviour and levels of non?compliance, of changes to compliance processes that it introduced or accelerated during the pandemic and has since made permanent, such as fewer face-to-face visits and digital filing of returns.
Matched on
terms: tax
Committee recommendation
57match
#35 - Twelfth Report - Tax after coronavirus
We support the plans announced by HMRC in July 2020 to digitise and improve tax administration. If tax reform is to be successful, it is important that HMRC has the capacity and funding to carry out reform and is not hindered by out of date systems.
Matched on
terms: tax
Committee recommendation
57match
#1 - Forty-Eighth Report - HMRC’s management of tax debt
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) on the issue of its management of tax debt.1
Matched on
terms: tax
NAO recommendation
57match
Investigation into the implementation of IR35 tax reforms
There are opportunities for HMRC to continue to improve the customer experience and compliance. It should: a) Further develop the CEST tool and accompanying guidance to make it as easy as possible to use accurately. This includes: • taking a structured approach to analysing sources of mistakes and user feedback to improve the questions and limit the scope...
Matched on
terms: tax
Committee recommendation
56match
#15 - Twenty-Ninth Report - Whitehall preparations for EU Exit
The Treasury has acknowledged the need for more timely, transparent financial information on cross-government areas of work, including both EU Exit and the Covid-19 response.39 In the past, it has said that this is particularly difficult because these areas of work do not fit into accounting categories used to collect data.40 The Treasury expects that its new OSCAR...
Matched on
terms: programme
Committee recommendation
56match
#30 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC’s Making Tax Digital initiative is central to its 10-year modernisation strategy. It requires taxpayers to keep tax records and submit returns digitally. HMRC introduced Making Tax Digital for VAT first. The largest VAT traders provided digital returns in 2019, and the smaller ones are being required to do so by April 2022.54 HMRC now plans to extend...
Matched on
terms: tax
Committee recommendation
53match
#13 - Twentieth Report - Tackling the tax gap
During the pandemic, HMRC told us that it had to redeploy its resources from frontline activities, such as collection of tax, to work supporting taxpayers through the COVID support schemes. HMRC expects a reduction on compliance yield in 2020–21 compared with previous years.30 HMRC’s compliance yield dropped by 51% in the first quarter of 2020–21 compared to the...
Matched on
terms: tax
Committee recommendation
52match
#14 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC how much of the increase in the cost of R&D tax reliefs was down to abuse. HMRC said monitoring was difficult because over time R&D tax reliefs had become increasingly generous and thus an increase in claims would be expected. It also said that claims have consistently exceeded forecasts, and it had therefore tried to...
Matched on
terms: tax
Committee recommendation
52match
#36 - Ninth Report - Child Maintenance
The Department told us that its Transformation programme should reduce costs and improve payment compliance by digitalising processes and allowing its staff to move from case maintenance into enforcement activities.83 It expected CMS transformation to be complete by financial year 2024–25, at a cost of more than £30 million to save an estimated £151 million.84 The Department told...
Matched on
terms: programme
Committee recommendation
52match
#20 - Thirty-Third Report - HMRC performance in 2021–22
HMRC said it is trying to improve the data it uses to understand the behaviour of its debtors. It is experimenting with data from credit reference agencies.29 It is also developing a comprehensive single customer account, using funding it received in the 2021 Spending Review.30 HMRC’s digital services are currently separate and not integrated. The single customer account...
Matched on
terms: tax
Committee recommendation
52match
#25 - Thirteenth Report - Initial lessons from the government’s response to the COVID-19 pandemic
Our recent report on fraud and error highlighted that the taxpayer is expected to lose billions of pounds from the increased risk of fraud and error in the government’s COVID-19 schemes. It found that the cost of fraud and error within the tax and benefits system is fairly well understood by government, and HMRC and DWP have well-...
Matched on
terms: tax
Committee recommendation
52match
#29 - Thirty-Seventh Report - HMRC Performance in 2020–21
For 2021–22, HMRC has replaced most of its response time measures with metrics of whether it is easy for customers to access and deal with HMRC.52 Rather than call handling times, it now publicly reports the percentage of callers wishing to speak to an adviser who are able to get through. It continues to report publicly on its...
Matched on
terms: tax
Committee recommendation
48match
#33 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked about the support and software that would be available to small taxpayers. HMRC said it was gearing up to support customers but that it would not be delivering software itself. Nevertheless it had received pledges from industry that they would, as they did for VAT, provide free-at-point-of-service software for those taxpayers with the most simple needs.61...
Matched on
terms: tax
Committee recommendation
48match
#13 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC estimates that error and fraud in R&D tax reliefs was £336 million in 2020– 21, or 3.6% of related expenditure (2019–20 – £311 million or 3.6% of related expenditure). The C&AG considers the level of error and fraud estimated by HMRC to be material and qualified his regularity opinion in 2020–21 as he had first done in...
Matched on
terms: tax
Committee recommendation
48match
#11 - Thirty-Seventh Report - HMRC Performance in 2020–21
The cost of R&D tax reliefs has grown by 241% over the last four years to reach £9.3 billion in 2020–21 (Figure 1). In 2019, UK companies claimed tax relief on £47.5 billion of R&D spending; 83% more than the Office for National Statistics’ (ONS) estimate of privately financed business R&D spending in the UK. HM Treasury has...
Matched on
terms: tax
Committee recommendation
48match
#5 - Thirty-Seventh Report - HMRC Performance in 2020–21
It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes. HMRC introduced the loan charge in 2019 to recoup tax from people who used ‘disguised remuneration’ schemes to avoid tax. The imposition of the loan charge on taxpayers who were unknowingly sold an unlawful scheme by unscrupulous tax agents has led to some being...
Matched on
terms: tax
Committee recommendation
48match
#2 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC does not understand the reasons for the growth in the cost of research and development tax reliefs including how much is due to abuse. The cost of research and development (R&D) tax reliefs has grown by 240% over the last four years, with claims exceeding forecasts. Over this period R&D expenditure used to claim reliefs has grown...
Matched on
terms: tax
Committee recommendation
48match
#23 - Thirty-Seventh Report - HMRC Performance in 2020–21
We are concerned about how taxpayers are protected from those who promote avoidance schemes, and the financial damage that can follow if taxpayers unknowingly enter unlawful schemes. We therefore asked HMRC what progress it had made in pursuing the promoters of illegal schemes. It told us its strategy for tackling tax avoidance was two-pronged. It wants to reduce...
Matched on
terms: tax
Committee recommendation
48match
#6 - Thirty-Seventh Report - HMRC Performance in 2020–21
Yet again customer service has collapsed and HMRC’s recovery plans are not clear. For over a decade this Committee has repeatedly reported on HMRC’s inadequate levels of customer service. Following an examination by this Committee in 2016, HMRC’s customer service improved, but since 2017–18 it has been declining. The decline in performance accelerated in 2020–21 as HMRC diverted...
Matched on
terms: tax
Committee recommendation
44match
#11 - Sixth Report - Supporting our high streets after COVID-19
With hybrid working likely to become more common, co-working spaces may offer an opportunity to attract footfall to smaller high streets and town centres. The Government should consider how co-working office spaces can be taxed fairly so as to stimulate high street business without harming local authority income or BID levies.
Matched on
terms: tax
Committee recommendation
44match
#8 - Fourth Report - Road pricing
The Government must set out a range of options to replace fuel duty and vehicle excise duty. Those options should be revenue neutral and not cause drivers, as a whole, to pay more than they do currently. One of those options should be a road pricing mechanism that uses telematic technology to charge drivers according to distance driven,...
Matched on
terms: tax
Committee recommendation
44match
#6 - Fourth Report - Road pricing
In designing a replacement for fuel duty and vehicle excise duty, the Government must examine how an alternative road pricing mechanism can use price as a lever for change while subjecting motorists to fair levels of taxation. To that end, it may seek to make concessions in the interests of societal fairness, such as providing an annual allowance...
Matched on
terms: tax
Committee recommendation
44match
#5 - Fourth Report - Road pricing
In signalling a shift to any alternative road charging mechanism, the Government must make it clear to motorists who purchase electric vehicles that they will be required to pay for road usage, as is currently the case for petrol and diesel vehicles. It must ensure that any alternative road charging mechanism incentivises motorists to purchase vehicles with cleaner...
Matched on
terms: tax
Committee recommendation
44match
#3 - Fourth Report - Road pricing
To promote fairness and public acceptance, any alternative road charging mechanism must (a) entirely replace fuel duty and vehicle excise duty rather than being added alongside those taxes; and (b) be revenue neutral with most motorists paying the same or less than they do currently.
Matched on
terms: tax
Committee recommendation
44match
#28 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC why call handling performance had been declining before COVID-19. HMRC told us that it was resourced to give a “decent” rather than “brilliant” service and it had efficiencies that it had to deliver. It said that although some phone contact was very important to HMRC and to the taxpayer, some of it was “low value”,...
Matched on
terms: tax
Committee recommendation
44match
#26 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC why response times were very poor at the end of 2020–21. HMRC said in the first half of 2020–21 it had diverted 5,000 customer service staff to work on COVID-19 support schemes. HMRC also said that during this period it did not have backlogs. It told us that in the second half of 2020–21, its...
Matched on
terms: tax
Committee recommendation
44match
#24 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC whether it could do more to publicise its successes, including the naming and shaming promoters of avoidance schemes. HMRC explained how it was seeking to reduce demand through transparency. It said it published annual reviews of the tax avoidance market and it was more quickly disclosing information on promoters and their schemes, to warn off...
Matched on
terms: tax
Committee recommendation
44match
#22 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC told us the nature of tax avoidance has changed. It said the bulk of avoidance schemes now relate to employment taxes and are not targeted at affluent people but middle-income earners, some of whom knowingly enter avoidance schemes and others who unwittingly get involved.39 In 2019, HMRC introduced the loan charge to recoup tax from people who...
Matched on
terms: tax
Committee recommendation
44match
#20 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC whether it would generate more revenue if it concentrated more of its compliance activities on large companies and less on small businesses and individuals. It told us that payback was a key factor when deciding how to deploy its resources, but not the only one. HMRC added that the marginal yield from additional compliance spending...
Matched on
terms: tax
Committee recommendation
44match
#19 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC’s annual report shows that it spent over £1.5 billion on compliance activities in 2020–21.31 The rate of return from those activities varied across HMRC’s five customer groups in 2020–21 (Figure 2). Returns were highest from large businesses, with average yield of £60 for each £1 HMRC spent on compliance, and wealthy individuals (£16 to £1). Returns were...
Matched on
terms: tax
Committee recommendation
44match
#17 - Thirty-Seventh Report - HMRC Performance in 2020–21
We asked HMRC whether it was going to return to the cases it had not taken forward during 2020–21. It told us that, by and large, the action it took in 2020–21 would defer its ability to correct any non-compliance and recover tax, and it would not involve a significant loss of revenue as tax legislation enables it...
Matched on
terms: tax
Committee recommendation
44match
#16 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC estimated that compliance yield from its tax compliance activities in 2020– 21 was £30.4 billion. Yield was down 18% from the £36.9 billion HMRC generated in 2019–20. HMRC has reported the reduction reflected higher than usual performance in 2019–20 and lower than usual performance in 2020–21. In 2019–20, HMRC’s performance was boosted by a small number of...
Matched on
terms: tax
Committee recommendation
44match
#10 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC is responsible for administering Corporation Tax research and development (R&D) reliefs, which support companies that work on innovative projects. There is a scheme for small and medium-sized enterprises, and a research and development expenditure credit scheme, mainly for larger companies. Both schemes are complex and open up opportunities for abuse.23
Matched on
terms: tax
Committee recommendation
44match
#3 - Thirty-Seventh Report - HMRC Performance in 2020–21
HMRC does not have a convincing plan for restoring compliance activity back to pre-pandemic levels. In response to the pandemic, HMRC suspended some of its compliance work in 2020–21 where taxpayers could not cope with inquiries, and because it needed to redeploy staff. The number of compliance investigations which HMRC opened and closed in the year fell, which...
Matched on
terms: tax
PHSO casework decision
44match
P-001689 - HM Revenue and Customs
Mr D complains about HM Revenue and Customs blocking access to his personal tax account meaning he could not claim expenses and a tax rebate.
Matched on
terms: tax