HMRC's MTD Track Record: What the Public Accounts Committee Found

Tax Queen

Tax Expert @ Pie

3 min read

The Public Accounts Committee (PAC) has found that HMRC's compliance productivity, costs and taxpayer trust have all worsened in recent years, even as investment has grown. The finding matters now because Making Tax Digital, HMRC's biggest digital overhaul in decades, began its first phase on 6 April 2026 for self-employed people and landlords earning over £50,000. This piece looks at what the PAC found and why HMRC's own track record, not your compliance obligations, is the story here.

HMRC has come under sustained criticism from the Public Accounts Committee (PAC) over falling compliance productivity, rising costs and declining taxpayer trust, a track record MPs say raises real questions about the tax authority's ability to deliver Making Tax Digital (MTD). The PAC's "Cost of the Tax System" report looked at HMRC's overall performance rather than at taxpayers themselves, and its findings are worth understanding on their own terms, separate from whether you personally need to comply with MTD.

Paperwork showing an analysis of HMRC’s Making Tax Digital track record

What the Public Accounts Committee Found

The PAC's report set out a picture of an organisation whose performance has slipped even as investment has grown:

Compliance productivity has fallen from over £1.4 million per worker pre-COVID to £1.27 million in 2023–24.
HMRC's overall tax collection costs rose by £563 million, or 15%, in real terms between 2019–20 and 2023–24.
Salary costs alone rose by more than £100 million over the same period, as HMRC hired more senior staff.
Customer service has continued to disappoint, with a large share of calls to HMRC helplines made up of taxpayers simply chasing progress on existing queries.

Publishing the report, the committee's chair, Sir Geoffrey Clifton-Brown MP, described HMRC as a "lumbering dinosaur" and said the department needs to do far more to rebuild trust.

Why HMRC's Own Record Matters, Separately From Your MTD Obligations

It's worth being clear about what the PAC report is, and isn't, about. It isn't a warning to taxpayers about penalties or deadlines. It's an assessment of whether HMRC, as an institution, has the capacity and track record to run a major overhaul of the tax system well. The PAC found that MTD has generated additional tax revenue for HMRC, but has also imposed extra administrative costs on the taxpayers and businesses required to use it, at a time when the department's own delivery record was already under strain.

Software providers such as Pie Tax build tools to handle the compliance side, but they can't fix HMRC's own service and productivity issues. That distinction matters. Whether MTD works for you depends on eligibility, thresholds and the software you choose. Whether MTD works at all, at scale, depends on HMRC's execution, and that's what the PAC was scrutinising.

If you're still working out whether you need to register at all, our guide on how to register as self-employed with HMRCcovers the basics.

Professional woman writing in a notebook at an office desk with a laptop and documents, reviewing why HMRC’s own record matters separately from your MTD obligations.

A Slow Start to the Pilot

Before MTD for Income Tax went live, uptake in HMRC's voluntary testing programme was strikingly low. Official figures showed just 2,400 people had joined the pilot, only 0.34% of the hundreds of thousands of self-employed people and landlords expected to fall into scope from April 2026. Accountancy bodies warned at the time that low pilot participation meant HMRC had limited real-world feedback to refine the system before mandatory rollout began.

That thin pilot uptake sits alongside the PAC's wider findings as part of the same story: a programme delivered by a department its own scrutiny committee has accused of losing sight of taxpayers' needs.

Where Things Stand Since Launch

MTD for Income Tax began for the first group of taxpayers on 6 April 2026, applying to self-employed people and landlords with qualifying income over £50,000. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Given HMRC's history with this programme, first proposed for 2018 and then repeatedly pushed back over eight years, the PAC's concerns about productivity, cost and trust are the backdrop against which the rollout's success will be judged.

Landlords affected by the phased rollout may also want our guide to Making Tax Digital for sole traders and landlords, which covers eligibility and quarterly reporting in more depth.

If you want to know whether you're affected and what MTD actually requires of you, our Making Tax Digital software covers eligibility, thresholds and compliance in full.

Self-employed individual preparing digital tax records

The Bigger Challenge for HMRC

Making Tax Digital was meant to modernise tax administration and cut into the roughly £9 billion lost each year to errors and carelessness. But the PAC's findings suggest HMRC's own house isn't fully in order: falling productivity, rising costs and eroding trust don't sit comfortably alongside a department asking millions of taxpayers to adopt a new way of working. If you're preparing for your next filing in the meantime, our guide to filing a self-assessment tax return walks through the process step by step, and our self-assessment deadlines guide covers the dates you shouldn't miss.

The UK's self-assessment system relies heavily on voluntary compliance. Taxpayers who don't trust HMRC to be efficient, fair and competent are, understandably, harder to bring along on major changes like MTD. That's the real stake in the PAC's report: not a specific penalty or deadline, but whether HMRC has earned the credibility it needs to make MTD work. You can browse more of our HMRC coverage for related context.

Where Pie Tax Fits In

While HMRC works through its own productivity and trust issues, you still need a reliable way to stay compliant. Why Pie explains what sets the app apart from HMRC's own systems and other software providers.

If you'd like to see exactly how filing works in practice, how Pie Tax works walks through the process step by step. You can get started with Pie for free, or download the app to try it for yourself.

Two professionals discussing digital tax reporting

Final Summary

The Public Accounts Committee found that HMRC's compliance productivity, cost control and taxpayer trust have all worsened in recent years, even as investment has grown. Pilot uptake for Making Tax Digital was similarly weak before its April 2026 launch, just 0.34% of those expected to be affected had joined.

Together, these findings form HMRC's track record heading into one of the biggest changes to the tax system in decades, and they're worth understanding on their own terms, as a question about HMRC's institutional performance rather than about what you personally need to do to comply.

Get Started for Free