Around 400,000 self-employed individuals and landlords are set to breach Friday’s landmark 7th August Making Tax Digital (MTD) deadline, warns global professional accounting body ACCA (the Association of Chartered Certified Accountants).
With HMRC data revealing only just over 400,000 out of 850,000 mandated taxpayers have actually signed up, more than 50% of the target population remains completely unregistered for the biggest shake-up to the UK tax system in a generation.
Commenting on the looming compliance crisis, Yogesh Dhanak, Senior Technical Advisory Manager at ACCA, said:
“While HMRC has confirmed a 12-month soft-landing period where late filing points won’t be issued for these initial quarterly updates, taxpayers must not treat this as a free pass.
“HMRC can still penalise businesses for failing to keep digital records or for deliberately withholding information. Crucially, submitting ‘nil’ placeholder returns with the intention of fixing the numbers at the end of the year is completely unacceptable. These updates must be fully reconciled transactional submissions tied directly to bank feeds.
“ACCA believes HMRC must provide urgent clarity on these requirements before any penalties are leveraged.”
ACCA highlights critical gaps in HMRC’s communication strategy – claiming their MTD awareness campaign has fallen short. Dhanak added:
“The fact that less than half of mandated taxpayers have registered highlights a clear deficiency in HMRC’s awareness campaign, exacerbated by delays in getting official systems and guidance ready.
“While digital record-keeping should ultimately help small businesses reduce errors and better understand their performance, the immediate future looks incredibly challenging.
“If HMRC cannot successfully onboard higher earners now, the problem will severely compound when lower-earning sole traders are dragged into the scheme in 2027/28. Taxpayers – backed by qualified accountants – are currently the only ones positioned to navigate these changes successfully.”
Dhanak believes rising costs are a massive barrier stopping sole traders and landlords from meeting the MTD deadline.
“The government has acknowledged that MTD will drive up setup fees and ongoing costs. Many individuals will need to engage a qualified accountant for the first time just to remain compliant. Because qualified professionals adhere to strict ethical rules to ensure data validity, these rigorous checks will inevitably reflect in additionalcosts for clients.
“Navigating the market of nearly 90 HMRC-approved software options is also proving to be a minefield. A significant proportion of these products are not yet fully functional for quarterly filing. Furthermore, many free or cheaper software options feature limited functionality, often blocking professional agents from accessing the system to verify data before it is submitted.”
Image provided by ACCA
