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Myth or reality?

Reduce errors cost uncertainty and worry; help businesses to get their tax right; transform tax administration. These are some of the bold statements made by HMRC about Making Tax Digital (MTD) and only time will tell whether these claims are correct. I hope so. But it is the claim that MTD will increase VAT revenues by £1bn by 2022-23 by ‘improving accuracy’ that has caused me most confusion and doubt. This figure is a small part of the £9bn annual tax supposedly lost by HMRC caused by ‘avoidable mistakes’ – quoted in s 3 of the Revenue’s stakeholder communication pack for MTD (tinyurl.com/yb74f6kk).

My confusion is: if MTD does reduce errors which is good news for everyone why does HMRC assume these errors will produce net underpayments of tax? After all if a business owner...