Research prepared for HMRC on the 'Impact of Making Tax Digital for VAT' reveals a mixed picture regarding the benefits that Making Tax Digital (MTD) for VAT can offer businesses. It seems that if you really want to ensure accuracy in your VAT reporting you need to engage an accountant and use fully functional software.

The research, published in July 2021, considered the impacts, costs and benefits of MTD for VAT. Essentially, was it worth it? Has it reduced the scope for error? What will lead to positive outcomes?

Data was gathered by independent researchers during the lockdown in 2020 from a sample of  2,005 interviews with businesses that had submitted a VAT return via Making Tax Digital for VAT. The sample was ‘boosted’ to gather more information from medium-sized businesses and later adjusted and re-weighted.

The resultant data gathered gives some intriguing results and shows that small self-employed businesses that lack tax agent support obviously have very different needs to other businesses.

The business surveyed were divided as to whether MTD has increased its confidence in getting their taxes right.

70% of the business are using tax agents, and the use of agents increased by the self-employed due to MTD for VAT.

70% of the business use fully functional software, as opposed to say a spreadsheet with bridging software.

Only a third of the business (31%) reported spending less time on their returns

Only 14% thought that they had saved anytime over the actual submission of their returns: this is unsurprising as the old system was so simple.

It is very difficult to discern from the data provided the cost to business of the new system.


For some odd reason the research is buried in the Paying HMRC section of HMRC's website, there is a link below.

Topical guides

Making VAT Digital Zone
Our guides to Making Tax Digital for VAT, including guides to functional compatible software.

VAT penalties
What penalties apply if you are unable to file your VAT return, you make a mistake, or you pay late?

Making Tax Digital Zone
What's next? Reporting changes for Self Assessment and Corporation Tax.

External link

Research Impact of Making Tax Digital for VAT

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