‘True costs’ of Making Tax Digital still unclear, says Treasury Committee

The Treasury Committee has again called on HM Revenue & Customs (HMRC) to provide greater clarity on the true costs of Making Tax Digital (MTD) for small and medium-sized enterprises (SMEs).

Chairman of the Committee, Andrew Tyrie MP, has said that HMRC should implement a far-reaching MTD pilot for businesses prior to the mandatory roll-out of the project in 2018, to probe the true extent of transition costs.

In previous weeks, the tax authority has hinted that the average SME is likely to incur costs of around £280 in the year of transition. However, the Federation of Small Businesses (FSB) has predicted that costs could rack up to £2,770 per business.

Commenting on the contradictory data, Mr Tyrie said: “There are huge differences between the FSB and HMRC about the administrative burden of Making Tax Digital.

“The FSB think that with MTD, businesses might spend three times as much time on their tax obligations as they currently do … which serves to illustrate the need for the implementation of one of the Committee’s recommendations that a comprehensive pilot is needed to establish the facts, and before mandatory roll out of the digital regime”.

He added: “I have written to the Administrative Burdens Advisory Board to ask for a view on the basis of their members’ extensive business and accountancy practice networks”.