01454772727 mail@harwoodlane.co.uk

MTD for VAT brings in extra £195m

15th March 2022

Making Tax Digital for VAT brought in as much as £195 million tax revenue in the 2019/20 financial year, according to research from HMRC.

Depending on the method HMRC used, estimated additional tax revenue totalled between £185m to £195m.

On average, businesses below the £85,000 VAT threshold paid an extra £78 of tax, while those above the threshold provided an additional £228.

HMRC had previously estimated MTD for VAT to bring in around £115m in extra tax revenue.

It said:

"This research provides strong evidence that MTD is achieving its objective of reducing the tax gap by reducing the amount of errors made when filing tax returns."

MTD is a key part of HMRC's transformation of the tax system to make it easier for taxpayers to get their tax right first time and reduce the scope for error.

Since the introduction of MTD for VAT in April 2019, over 1.5 million businesses have joined the scheme.

VAT-registered businesses below the £85,000 threshold will have to join MTD for VAT from 6 April 2022.

Talk to us about MTD for VAT.

Click here for ICAEW website  Click here for SAGE website