HMRC have admitted that MTD (Making Tax Digital) will end up costing businesses more than it will save them. Original forecasts from HMRC said the scheme would save businesses £100m per year from 2021 however the annual report now reveals that there will be no cost savings and the extra work will end up costing firms £37m per year.
HMRC claim the change is due to the fact that only companies with turnover higher than £85K will have to file returns digitally, whereas,initially, it was to include all businesses. Most of the savings from the scheme would have been made by companies below this threshold, HMRC said.
HMRC are also expecting to generate £440m less in additional tax revenue by 2020-21 than first predicted however claims that the scheme will still generate £1bn in additional revenue by 2023.