Simply Business - Insurance for your business

Call Us0333 0146 683
Our opening hours
Knowledge centre

Making Tax Digital proposals could cost businesses £3k a year

1-minute read

Making Tax Digital proposals could cost businesses £3k a year
Josh Hall

Josh Hall

29 March 2017

The government's controversial Making Tax Digital proposals will cost businesses an average of £2,770 a year.

This is according to the Federation of Small Businesses, who looked at the impact of HMRC's plans for firms to complete tax returns quarterly, rather than annually.

The FSB looked at the staffing costs involved in completing the extra returns. They say businesses will spend three times as long on their reporting obligations if Making Tax Digital is introduced.

Costs could rise

But they warns the figure could be even higher, as their research didn't include factors like installing new software and training staff to use it, or IT support.

The FSB's figures a wildly different from the estimates put forward by the government. HMRC has previously said that it believes the changes will cost businesses an average of just £280.

The Revenue expects the transitional cost to be minimal for larger businesses. In a consultation document explaining its calculation, it said: "HMRC believes that VAT-registered, medium sized and large businesses are very likely to already have good or adequate IT hardware. If anything urgent is required, this may only require a minor upgrade."

Call for pilot

Conservative MP Andrew Tyrie, chairman of the Treasury select committee, has pushed the government for an independent assessment of both HMRC and the FSB's figures.

In a statement yesterday, Tyrie said: "There are huge differences between the FSB and HMRC about the administrative burden of Making Tax Digital.

"This is the heart of the matter. The FSB think that businesses might spend three times as much on their tax obligations as they currently do. HMRC think they will spend less time, leading to a small net saving. A comprehensive pilot should shed some light on which assumption is closer to reality."

Who do you believe? Let us know in the comments.

Is your business insured?

We have 800,000 UK policies plus a 9/10 satisfaction score. Why not take a look at our expert business insurance options - including public liability insurance and professional indemnity - and run a quick quote to get started?

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.


People also liked

Landlords could be targeted in new capital gains tax raid.

19 November 20202-minute read

Landlords could be targeted in new capital gains tax raid

Landlords could be hit by another massive tax raid, as the Office of Tax Simplification outlines its recommendations for an overhaul of…

Read more

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter


Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19 business support hub


6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.