Making Tax Digital for VAT should be delayed by at least one year and the government should wait until April 2022 before extending it to other taxes so lessons can be learned from implementing the initiative.

These are the recommendations of the House of Lords’ Economic Affairs Committee’s report, Making Tax Digital for VAT: treating small businesses fairly.

The lords considered many businesses would not be ready for the introduction of MTD for VAT in April 2019 and that HMRC had inadequately considered the needs and concerns of smaller businesses.

The committee welcomed attempts to modernise HMRC’s systems and increase efficiencies for taxpayers, but remained unconvinced by the Revenue’s claims that digitalisation would narrow the tax gap by reducing errors in submissions.

The report concluded that neither …