Making Tax Digital scheme five times over initial budget

In a press release, the CIOT commented on a report by the National Audit Office (NAO) that states that the MTD project is now expected to cost five times it’s original budget. The institute said that HMRC was pursuing unrealistic timetables with questionable benefits. It also noted that the move to MTD with the VAT system initially led to VAT liabilities being overstated by £5 billion. The NAO is calling for a fresh business case from HMRC in respect of MTD for Income Tax Self-Assessment (MTD ITSA).

It’s unclear whether the report will have any effect on the anticipated rollout of MTD ITSA, which has already been pushed back. Until anything is announced, it is prudent to assume that things will proceed according to the most recent timetable, i.e. April 2026, with the self-employed and landlords with turnover in excess of £50,000 joining first. Those with income over £30,000 but not exceeding £50,000 will not need to join until April 2027. A start date for general partnerships has not yet been announced. The position for smaller businesses remains uncertain, as HMRC continues to review the suitability of MTD ITSA for these entities.