Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the likely impact of HM Revenue’s ‘Making Tax Digital’ compulsory VAT scheme on the number of SME business that have (1) ceased trading, or (2) reduced turnover to below the VAT threshold.

There is no evidence to suggest that businesses have either ceased trading or reduced their turnover to below the VAT threshold due to Making Tax Digital (MTD) for VAT.

Following the successful introduction of MTD for VAT-registered businesses with taxable turnover above the VAT threshold in April 2019, the Government has extended MTD for VAT to all other VAT-registered businesses from April 2022.

Independent research shows that businesses using MTD-compliant software for their VAT obligations are realising efficiency benefits and the resulting reduction in errors is leading to additional tax revenue.