The financial benefits of Making Tax Digital for VAT could be as high as £915 million, according to analysis carried out by HMRC.

Since April 2022, all VAT registered businesses should be using MTD compatible software to keep digital records and submit returns.

HMRC used responses from a survey with businesses in MTD for VAT using fully functional software to estimate the average time savings businesses have made.

The results showed that, on average, businesses have saved time on their ‘business finances and record keeping’ compared to time spent before MTD. Across all VAT businesses using fully compatible software, the time saved is estimated to be between 26 hours and 40 hours per business per year.

HMRC said that if this was extrapolated to the population, it estimated a time saving of between 32 million hours and 49 million hours in the 2022/23 tax year across all businesses in MTD for VAT.

The financial value of this time is estimated to be between £603 million and £915 million.

HMRC said:

‘The results of our analysis provide strong evidence that Making Tax Digital is having a positive impact for businesses. The findings complement other published estimates of the administrative burden of Making Tax Digital and demonstrate a wider economic benefit, beyond any requirement to meet tax obligations.’
 
For more information on MTD for VAT or questions on if you should become a VAT registered business, please get in touch.

Internet link: GOV.UK