The report says that HMRC has lost sight of the need to put taxpayers at the heart of changes to the tax system.
The PAC says that HMRC is increasing the burdens imposed on some taxpayers through the MTD initiative. It said that in seeking further investment in MTD, HMRC has not been transparent enough about the 'substantial costs' MTD will impose on many taxpayers.
According to the Committee, the design of MTD fails to take into sufficient account the realities facing business taxpayers and agents.
It said that while MTD will 'substantially benefit' HMRC by improving its systems, taxpayers are asked to spend more and do more in order to be compliant.
The report revealed that HMRC excluded more than £2 billion in upfront transitional MTD costs for taxpayers from its 2022 and 2023 business cases for the scheme. It also found that 'widespread and repeated' failures in HMRC's planning, design and delivery of MTD have led to increased costs and delays to the initiative.
Meg Hillier, Chair of the PAC, said:
'When reporting on proposals for digitalising the tax system, our committee should not have to be recommending that HMRC start with what taxpayers need – in an ideal world, one would hope this would simply go without saying. But seven years and £640.