A new report in The Times has revealed that the government is set to delay its programme to digitise tax for two years, due to the Treasury’s computer systems not being ready to implement the planned changes.
The Making Tax Digital programme, first announced by former Chancellor George Osborne in 2015, will mean that self-employed workers earning over £10,000 per year would need to keep digital accounting records and file quarterly tax updates (as opposed to the current annual system) using new HMRC software.
HMRC believes the changes will promote more accurate tax reporting and more frequent payment, helping to reduce the £32 billion (5.1 per cent of the UK’s annual tax bill) that it claims is underpaid each year.
The changes were initially set to be introduced in April 2023, a date that was subsequently delayed for 12 months due to IT systems not being ready. However the changes are now to be delayed further until April 2026, with a notice on HMRC’s official page for Making Tax Digital stating: “The dates for helping HMRC test and develop Making Tax Digital for Income Tax have been extended to 6 April, 2026.”
While this update was quickly removed, The Times reported that three big accountancy firms said they had received confirmation that the delay to 2026 would be announced shortly.
Quoted in The Times, Blick Rothenberg Chief Executive Nimesh Shah said HMRC’s preparations for the new system had been “shambolic”, citing the fact that no pilot had been conducted for the software and that the government had not published costings for the project since it was first announced.
Moore Kingston Smith partner Claire Roberts claimed that a lack of preparation meant HMRC had no choice but to delay the changes, commenting: “A delay is essential to properly address the issues being raised and alert taxpayers to the mammoth changes coming down the track.”
An HMRC spokesperson did not comment on the timing of an announcement regarding the delay, but pointed to comments made by HMRC Chief Executive Jim Harra to the House of Commons public accounts committee in November.
At that time, Harra said the 2024 introduction was “under review” due to the deadline being “quite pressured, both internally on HMRC being ready, but also the external readiness of software houses and small businesses”.
