Tax and advisory firm Blick Rothenberg have noted that HMRC’s statistics claim that simple careless mistakes by businesses and individuals accounted for more than £9.2 billion of the tax gap in 2016/17.
“The strategic drive around Making Tax Digital should be a win-win for HMRC in cutting down errors from paper record keeping, resulting in billions more tax take alongside much less investigative resource drain in this area,” said Jessica McLellan, a director at the firm.
According to HM Revenue and Customs the largest single element of the tax gap was a result of careless behaviour (failure to take reasonable care). It added that alongside errors, on a case by case basis these discrepancies may appear relatively small, but the numbers of taxpayers involved means the overall impact on tax revenue becomes significant: £9.2 billion of the UK tax gap in 2016-17.
It said that the vast majority of businesses want to get their tax right – and the government’s Making Tax Digital reforms will help them to do that. Making Tax Digital will make it easier for businesses to get their tax right by cutting down on the errors that can result from keeping records on paper and manually entering VAT return data into HMRC’s online portal – in a recent YouGov poll, 61% of businesses said they have previously lost receipts – as well as manual transposition of data and manual calculations. The reduction in these errors is expected to be significant, with Making Tax Digital forecast to deliver additional tax revenue to the Exchequer of around £1.2 billion to 2023-24.
For more on Making Tax Digital see the forthcoming issue of The Global Recruiter.