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This week's opinion

03 May 2017
Issue: 4597 / Categories: Comment & Analysis

Economic impact of MTD

One of the many controversial aspects of Making Tax Digital (MTD) is its impact on the overall tax take. HMRC’s primary justification for its mandatory introduction is now the contribution it will have on the reduction in the tax gap.

There is widespread though not universal agreement that if people are up to date in their record-keeping they are more likely to produce accurate accounts. So HMRC is probably right to say that MTD once it has bedded in is likely to reduce errors. But it is a big leap from that to assume that the reduction in errors will work in HMRC’s favour. Surely errors are just as likely to result in people not claiming expenses to which they are entitled?

The Office for Budget Responsibility (OBR) has published details of its scrutiny of HMRC’s figures. It said: ‘Errors are assumed on balance to...

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