MAKING TAX DIGITAL is about HMRC collecting more tax from everyone. It's the so called tax gap - the difference between what HMRC believe they should collect in taxes and what they actually collect. Apparently we underpay tax because we do not use digital accounting systems. So if we use compliant software it will make us get the tax right and pay over the correct amount. The accounting software industry is going to make freely available MTD compliant apps that we can scan all our receipts and press a button - job done!
Not too difficult to see the flaws in this thinking - but this is all part of HMRC's grand plan.
Will it happen? Well MTD for VAT submission is due to start from April 2019. As for other tax returns - well we're still waiting to learn. As a guide to whether it will be a success or not - have you seen any free MTD compliant Apps? Me neither. The accounting software industry obviously saw this is a great opportunity to sell their "compliant" software; but the reality is that unless free software becomes readily available people will fall back to what they know - spreadsheets. If properly designed the spreadsheet is capable of being a "compliant" piece of software. Good news for the general tax payers; bad news for the accounting software companies.