In a report on the government’s plans for the landmark new digital tax initiative, the Treasury Select Committee has urged HM Revenue & Customs (HMRC) to implement a series of wide-ranging pilots in order to better test the scheme before it becomes compulsory for the majority of taxpayers.
The report found that, while the government had already carried out trials of the new initiative, those businesses which took part had done so at HMRC’s invitation.
The Committee stated that comprehensive pilots of Making Tax Digital (MTD) are ‘essential’, and that these need to be designed to collect information over the entire reporting cycle.
It also suggested that an evaluation of these pilots should be carried out before the full implementation of the scheme.
Andrew Tyrie MP, Chairman of the Committee, said: ‘Without sufficient care, MTD could be a disaster. Implemented carefully, with long transitional arrangements where necessary, and, having drawn on information from fully inclusive pilots, MTD could be designed for the benefit both of the economy and of the tax yield.
‘But with a rushed introduction, it will benefit neither.’
Meanwhile, a government spokesperson commented: ‘Many businesses find it hard to get their tax bills right. MTD will modernise the tax system, helping them to get their tax bills right with the least administrative burden.
‘We’ve consulted business at every step and have already made changes as a result to exempt the smallest businesses and pilot the programme with hundreds of thousands before it is rolled out.’