Abstract

The purpose of this study is to utilise social cognitive theory to investigate and establish through empirical study, the confidence levels of taxpayers with ‘Making Tax Digital’ and further to facilitate an assessment of the readiness of taxpayers to be compliant with making tax digital requirements by industrial sector. This study used a survey instrument to collect data from 202 businesses in the Northwest of the United Kingdom. The data were analysed statistically through descriptive statistics and inferential analysis using SPSS.  The result from the study suggests and supports the notion that a transition to Making Tax Digital is industry sensitive and therefore any reform must consider the specific taxpayers in each industry. Consistent with prior research, the authors also find changes to a tax system are sensitive and need to be assessed against a practical criterion to gauge its full impact. Furthermore, this study finds that multi-industry sectors need clearer guidance on compliance. This has to be backed by a strong anti-avoidance business support system for sole proprietary businesses to enable them adapt to new way of reporting and paying taxes.  It is further recommended that HMRC develops a strong communication strategy that encourages and helps sole trader overcome challenges of Making Tax Digital. This is one of the few studies aimed to explore the impact on how well different industrial sectors will transition to Making Tax Digital. This study carries out a comparison to ascertain if there is a significant difference in the levels of confidence between industry sectors transitioning to Making Tax Digital.

Key word: Making tax digital, taxation, social cognitive theory, United Kingdom.