The Impact of Making Tax Digital (MTD) on Small Business Compliance and an Evaluation of HMRC’s Digital Reform Strategy

Findings show that MTD has halved compliance error rates and improved timely filing. However, micro and small enterprises bear disproportionate financial costs and administrative pressures. Software expenses average £800 annually, with higher costs for manufacturing and tech sectors, and administrative time commitments exceed 25 hours monthly for many SMEs. Correlation analysis indicates that higher turnover firms adapt more easily, while smaller businesses face increased penalties and lower satisfaction.