Delays in the UK tax collector's Making Tax Digital (MTD) program may result in a loss of £1.75 billion in additional tax revenue, according to a spending watchdog.
The delays particularly impact the introduction of MTD for self-assessment taxpayers with lower incomes.
The HMRC has not provided a timeline or cost estimate for the implementation of Making Tax Digital for Corporation Tax.
In October 2023, the government borrowed £14.9 billion, the second-highest figure for that month since records began in 1993, contributing to a historically high national debt of £2.6 trillion.
Over the past seven years, HMRC's program to digitize the tax system has faced repeated delays and cost overruns.
The Public Accounts Committee (PAC) estimates that the cost of introducing MTD for VAT and self-assessment alone will be 400 percent more than the original 2016 estimate of £222 million for all three taxes in the program.
The PAC is skeptical about HMRC's new timetable for Making Tax Digital, highlighting significant design issues and questioning the achievability of the proposed schedule.
The National Audit Office (NAO) previously reported a three-year delay and a budget increase from £226 million to £1.3 billion, attributing the issues to HMRC's decision to tackle two complex elements simultaneously.
The PAC calls for HMRC to test the existing plans for MTD, ensure their realism, specify and commit to a budget and timetable, and hold senior leaders accountable for delivery.
The NAO criticized HMRC for not fully assessing the scale of work required at the outset of the MTD program and for simultaneously introducing digital record-keeping for business taxpayers and replacing legacy systems.