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Business of Tax 2020

Digital tax will unlock business productivity

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Joanna Rowland

Director, Making Tax Digital for Business Programme, HMRC

Unlocking UK business productivity, making it easier to get tax right and providing the catalyst needed to get UK business to adopt digital technologies; the goals of Making Tax Digital (MTD) are lofty.

These are extremely difficult times for all of us and HMRC is committed to helping in every way possible all those businesses facing unprecedented challenges.

At HMRC we know the scale of the challenge, but our commitment to offer the best digital tax environment in which UK businesses can thrive remains firm.

Since becoming Director of Making Tax Digital (MTD) in January, I have been struck by the transformative nature of the programme: it heralds a new era for the relationship between British businesses and HMRC.

Under MTD, businesses are placed on a more digital footing and they are given the tools they need to succeed in an increasingly competitive global marketplace.

Our vision

While our vision for MTD is ambitious, we know that we cannot achieve it without the support of businesses and agents.

That’s why we are rolling out MTD on a phased basis, with the first major step being the digitalisation of the VAT Service that was introduced in April 2019.

VAT businesses over the £85,000 threshold have joined the MTD for VAT service in significant numbers, following an important pilot phase. Over 1.3 million businesses have signed up with in excess of 3.7 million submissions made through the service.

We want a wider range of businesses, as well as the self-employed and landlords, to experience the benefits of Making Tax Digital (MTD).

The publication of our Evaluation of MTD for VAT document answers the call for a comprehensive review of our progress before further mandation.

The document shows that over a quarter of businesses under the VAT threshold have chosen to join the service voluntarily. It’s clear that small businesses across the country are starting to benefit from the opportunities our service provides.

Thanks to various research reports, the Evaluation reveals that MTD is having a real impact on driving behavioural change among businesses, reducing scope for error.  

Stakeholder collaboration

Of course, there have been challenges, and we know there is more work to be done, but we look forward to further collaboration with stakeholders to ensure MTD remains mutually beneficial.  Along the way, customers of MTD throughout the country have been in touch to tell us how their operations have been improved by the service.

Andrew Moss, a Partner at DSG Chartered Accountant, says, “MTD has given us a great opportunity to talk to clients about their systems and help them, where need be, to transition to an environment where they are getting, or have the ability to get, more timely information about their business.”

Moss continues, “While initially MTD was seen as another burden on business, the wider digital benefits should be seen as a positive, as business owners can embrace new applications and improve their business processes to be more robust and efficient than in a pre-MTD world.”

As with all technological changes, there are transition periods, and it is reassuring to know that agents like Andrew Moss see short-term changes as worth the long-term rewards.

Looking to the future

In future, we want a wider range of businesses, as well as the self-employed and landlords, to experience the benefits of MTD. The successful rollout of MTD for VAT reinforces confidence in HMRC’s ability to deliver the necessary IT infrastructure, support and software market.

This is an iterative process and we will continue to work towards our common goals with stakeholders. I would urge our partners from across the software and agent communities to continue engaging with us, as this a combined success.

The future for businesses, and the UK at large, is digital. I hope you will join me on this journey.

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