This week, Customs began piloting its e-VAT system aimed at 250,000 businesses in the IT sector.
The system allows firms to file their VAT returns electronically. Customs anticipates it will be available to firms next summer.
The scheme is aimed at meeting government targets to have 50% take-up of online services by March 2006.
In its report, the National Audit Office warned: ‘The department has identified significant potential benefits from implementing the whole e-programme up to 2010.
‘However, these benefits may not materialise if important elements such as the take-up of e-VAT returns fall short of the targets.’
The initial attempt at the electronic gathering of VAT returns failed because it offered insufficient benefits for users to convert from the paper-based system.
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
Colin responds to the call for 'Darwinism' in accountancy
If businesses do not take cyber security seriously in their business planning regulators may do it for them, the ICAEW has warned