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Making Tax Digital said to cost £1.3bn

Making Tax Digital (MTD) is set to cost £1.3 billion in total - five times the original budget of £226 million, according to the National Audit Office (NAO).

In a report, the NAO said that repeated delays to tax digitalisation have increased costs and undermined the program's credibility.

The spending watchdog also claims that the initial timeframe was "unrealistic", saying these issues could have been avoided if HMRC had taken more time to fully explore its options.

Furthermore, the combined cost to HMRC and customers could potentially exceed the additional tax revenue expected from implementing MTD.

To address these issues, the NAO recommends that HMRC prepare a separate business case for MTD for income tax self-assessment. This could give decision-makers a better understanding of the costs and benefits of the program.

HMRC must also collaborate with stakeholders on how to best develop the new system and resolve outstanding technical issues.

Commenting on the report's findings, Gareth Davies, head of the NAO, said:

"The repeated delays and rephasing of MTD have undermined the programme's credibility and increased its costs.

"HMRC has made some recent progress on VAT, but it has not yet tackled the most complex elements of the programme, and significant delivery risks remain."

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