A report published by the National Audit Office (NAO) has found that HMRC's
Making Tax Digital (MTD) initiative is expected to cost around £1 billion more
than its initial £226 million budget, which was forecast in 2016.
MTD is intended to modernise the tax system for income tax self assessment, VAT
and corporation tax. It requires taxpayers to keep records digitally and submit
quarterly tax returns.
The NAO labelled HMRC's initial timeframe for the implementation of MTD as
'unrealistic'. It stated that bosses 'failed to take the scale of
the task into account'.
According to the NAO, HMRC's ability to secure value for money from MTD now
relies on exploring the options for reducing costs, resolving questions about
design and rigorously managing delivery risks.
The NAO has recommended that HMRC prepares a separate business case for MTD for
Income Tax Self Assessment (MTD for ITSA) so that those making decisions can
better understand the costs, benefits and risks associated with the initiative.
It has urged HMRC to include 'greater clarity' on how taxpayers will be
affected.
Gareth Davies, Head of the NAO, said:
'The repeated delays and rephasing of MTD have undermined the programme's
credibility and increased its costs. They put at risk the support of
taxpayers and delivery partners, including those who are essential to the
programme succeeding.
'HMRC's plan to digitalise the tax system has the potential to improve the
system's efficiency and effectiveness. It has made some recent progress on
VAT but it has not yet tackled the most complex elements of the programme
and significant delivery risks remain.'
Internet link: National Audit Office website