Opinion Former Article

Tax Institute welcomes evaluation of Making Tax Digital for VAT

The Chartered Institute of Taxation (CIOT) welcomes the announcement today that the government will publish an evaluation of the introduction of Making Tax Digital (MTD) for VAT along with related research, with the implication that this will be done before rolling out MTD to other taxes.

The results of a recent survey of businesses and their advisers by CIOT and the Association of Taxation Technicians led the Institute in January to call for a comprehensive review of MTD for VAT before HMRC takes the decision to go ahead with plans to roll out digital reporting obligations more widely.

The survey showed that:

  • Nearly 90 per cent of respondents said that MTD for VAT has not reduced errors
  • The costs of MTD compliance had far exceeded government estimates
  • Just 14 per cent of respondents said there had been an increase in productivity in their organisation as a result of MTD for VAT

Richard Wild, Head of the CIOT Technical Team, commented:

“This is a sensible decision by the government. Our view, which is supported by the results of our survey, is that the MTD project is far from achieving its goals and has proven more difficult to implement than the Government expected.

“Whilst compliance rates have been high, this has come with significant costs for business and their agents, and there are still a large number of taxpayers who have yet to become compliant with MTD for VAT.

“A much greater number of taxpayers will be affected by MTD for Income Tax compared to the number affected by MTD for VAT.  Many of them will be less digitally capable than VAT registered businesses and will find it more difficult to cope, so it is vital that MTD for VAT is working smoothly before it is rolled out any further.” 

Victoria Todd, Head of the CIOT’s Low Incomes Tax Reform Group (LITRG), added:

“LITRG welcomes this announcement of an evaluation. There are still significant numbers of taxpayers who are yet to take action, either to sign up or to claim exemption, many of whom will be unrepresented. HMRC need to do much more to support these groups. MTD for VAT must be working for everyone before moving on to income tax measures.”

Notes for editors

1. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

2.Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk.

Out of hours contact George Crozier 07740 477374 gcrozier@ciot.org.uk

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