HMRC's Making Tax Digital scheme also made tax more expensive – by £300M

The UK tax authority's push to digitize services has backfired, saddling taxpayers with hundreds of millions in extra costs, according to a report by Parliament's public spending watchdog.

The Public Accounts Committee (PAC) found that Making Tax Digital (MTD), launched ten years ago, was imposed with little consultation and left businesses unaware of the administrative financial burden they'd face.

For example, after the rollout of MTD for VAT in 2022, His Majesty's Revenue & Customs (HMRC) estimated net additional costs to traders of around £300 million ($401 million) between fiscal 2020 to fiscal 2024.

Similarly, in February 2024, HMRC calculated that moving income tax self-assessment to MTD would impose more than £500 million ($668 million) in costs on taxpayers – exceeding annual savings by around £200 million ($267 million).

"There is no strong evidence to date to suggest productivity improvements or other benefits for most VAT traders following the introduction of MTD," the PAC report said.

www.theregister.com