Making Tax Digital

Earl of Kinnoull Excerpts

Wednesday 17th September 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I of course remember my time on the Economic Affairs Committee, and I was privileged to serve when he was the chair of that committee. We produced many high-quality reports. I do not think I was on the committee at the time of the report that the noble Lord refers to, but I fully appreciate that there are costs to business of doing this—I think the recurring cost is estimated to be, on average, £110 annually. It is important to say that HMRC has worked with industry to ensure that a range of software is available, including free and low-cost software, and of course those costs do not take into account the benefits. There are important productivity and time-saving benefits.

As regards Making Tax Digital for VAT, HMRC has carried out a detailed evaluation of the impact of that, which shows that two-thirds of businesses report time-saving benefits. Of businesses that were using digital accounting software for the first time, 80% reported significant benefits, a quarter reported improved productivity and one-third had used Making Tax Digital software for other business processes. At a time when productivity is such a challenge—an issue that we frequently discuss in this House—and when small businesses make up such a large part of the economy, if we can see two-thirds of small businesses making significant productivity gains, that is a benefit worth having.

[The Earl of Kinnoull (CB)]

My Lords, I want to go back to the question from the noble Baroness, Lady Kramer, about helplines. I have to say that, for me—I declare my interest as a small farmer with a small business that wants to do things online—the helpline is not working at the moment, and we heard the numbers that show that it is not working. The most important thing is that that is understood and actions are taking place to make the helpline work, because the digital system will work really well as long as the helpline works too.

[Lord Livermore (Lab)]

I reassure the noble Lord that I absolutely understand that. I recently answered a Written Question on this exact point, so I am more than happy to share with the noble Lord the Answer to that Question.