Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the costs to businesses of interfacing their accounting software with HMRC in compliance with reguirements for the digitisation of reporting.

The costs incurred in the move to digital record keeping and reporting through Making Tax Digital (MTD) will vary from business to business, and are dependent on factors such as business size, complexity, degree of digital capability and the cost and functionality of the software used. There are free software products available for businesses with the simplest affairs.

HMRC’s early estimates published on 21 July anticipated that businesses will incur costs of, on average, £175 to make the transition to MTD, with about £20 a year in additional continuing costs. HMRC have since undertaken significant engagement with representative bodies within both the business and accountancy worlds, as well as software developers, in order to further understand the associated costs of future MTD mandation. These costs represent an investment that will yield dividends in terms of increased productivity and turnover. HMRC are working with these bodies in order to ensure estimates are accurate and will do all they can to minimise costs. A new publication with revised estimates will be published in due course.