The history of Making Tax Digital - why did the government decide to introduce it?



Back in 2015 the government starting looking at what was being lost across all taxes by errors, mistakes, omissions and delays and arrived at a figure of over £9billion lost annually. This led them to start planning fundamental changes to the tax system, effectively pushing the onus on to third party software to highlight and adjust for errors and omissions.


Following representations, the government have changed to making VAT registered businesses the first part of their plan as this is the tax most widely using digital means to produce returns currently. Please remember though that this sector only accounts for around 10% of the tax which they perceive as losing and it would take a very large stretch of the imagination to conclude that they will forget about the other 90%, so this is only the first step!