HMRC estimates ‘£20 a year’ cost for businesses of switch to Making Tax Digital
Minister says department has sought to minimise costs
The average ongoing cost to a business of moving to the Making Tax Digital platform will be just £20 a year, HM Revenue and Customs has estimated.
Using the digital system – which means implementing one of about 550 compatible third-party software programs – requires a company to make a typical upfront outlay of about £175, according to financial secretary to the Treasury Jesse Norman.
Once this has money has been spent, HMRC estimates made earlier this summer “anticipated that businesses will incur costs of… about £20 a year in additional continuing costs”, he added.
“The costs incurred in the move to digital record keeping and reporting through Making Tax Digital will vary from business to business, and are dependent on factors such as business size, complexity, degree of digital capability and the cost and functionality of the software used,” Norman said. “There are free software products available for businesses with the simplest affairs.”
There are currently 19 free MTD-compatible products, and 528 paid-for offerings.
Since April 2019, all businesses with annual revenue in excess of the £85,000 threshold have been required to digitally file their quarterly VAT returns. After a lengthy pause, it was announced earlier this year that the rollout of the MTD programme is due to recommence from April 2022, from which point all VAT-registered companies – regardless of size – will need to move to the digital system.
The following year, the scheme will be extended to any individuals filing self-assessment income tax returns for annual business or property income in excess of £10,000.
After HMRC made its estimates in July of the current financial implications to businesses of adopting the tech platform, according to Norman the tax agency has since worked to better understand the costs and how they can be minimised.
“HMRC have since undertaken significant engagement with representative bodies within both the business and accountancy worlds, as well as software developers, in order to further understand the associated costs of future MTD mandation,” he added. “These costs represent an investment that will yield dividends in terms of increased productivity and turnover. HMRC are working with these bodies in order to ensure estimates are accurate and will do all they can to minimise costs. A new publication with revised estimates will be published in due course.”
The financial secretary to the Treasury was answering a written parliamentary question from fellow Conservative MP Desmond Swayne.
Minister floats potential six-year deal as use of lie-detectors set to be greatly expanded
Laws must also be updated, according to Centre for Data Ethics and Innovation
At the end of a challenging year, local government chiefs discuss the impact on digital and data
UK and Scottish governments back project
2020 has been a year of unprecedented change for the UK public sector. Today’s agile working technology enables you to meet citizen needs in this challenging operating environment by empower your...