Making Tax Digital

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HMRC requesting taxpayers not to leave things until the last minute and yet despite 10 years to prepare further stories are emerging of delays for those that have already acted (what mess would they be in if everyone had acted):

I am still waiting on HMRC to reply to applications for exclusion. Three replies so far, all successful. Four have ceased trading, but HMRC do not believe it on two, wanting the 2026 return submitted. Waste of time bothering for the one who has not yet told them, and no reply on the other. Let property sold CGT paid last August but no reply from HMRC.
Seven have not heard a blessed thing, one of which I actually called HMRC about on 10th of Feb (non English speaker). Two months and no reply. Until those seven have a reply and any refusal appealed and gone to FTT then now is definitely not the time to to do anything other than wait out on HMRC.

Is Craig telling me to register all these people, because HMRC might not agree?

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By Tornado
09th Apr 2026 09:54
Dear Mr Ogilvie

The message is that MTD has arrived, but has it really arrived?

There is a wealth of information alone on AWEB to suggest that your Software and Systems are full of holes and procedures that do not work properly and are thus, far from being Fit for Purpose.

Can you say for sure that your systems are Fit for Purpose and explain why you think this is so.

If you cannot confirm that they are Fit for Purpose then I would naturally assume that commercial MTD software is not Fit Purpose either as this relies of your systems being fully functional and reliable.

You are urging us to Register out clients for MTD, but I will not do this until I am sure that your systems and associated Commercial Software are Fit for Purpose. Why would I and thousands of other Professionals invest significant time and money into a system that is not only pointless but has not been proven to actually work?

A simple straightforward answer from you to this question would help -

Are the HMRC MTD Systems and Software proven to be Fit for Purpose?

I will not be registering any clients until I am assured your systems have been thoroughly tested and are working correctly and that that commercial software developers have been given all the information they required.

I would also suggest that Legislation can only be effective if HMRC have fulfilled your own obligations and I am not sure that HMRC have done this. I don't think the law actually requires us to work with systems that are not Fit for Purpose.

An Honest answer to a simple question would be appreciated.

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HMRC's cost forecasts are poorer than West Ham's results this season. They just cannot be trusted:

Based on reports from the National Audit Office (NAO), parliamentary committees, and industry surveys, HMRC’s estimates for Making Tax Digital (MTD) software and compliance costs were not accurate and significantly underestimated the burden on businesses.

Here is a breakdown of the evidence regarding the accuracy of HMRC's estimates:

1. Significant Underestimation of Costs
• Initial vs. Revised Costs: HMRC's initial 2016 estimate for MTD implementation was £226 million. By 2023, the forecasted cost for MTD for Income Tax (ITSA) alone had risen to £1.3 billion, representing a roughly 400% increase in real terms.
• Excluded Costs: A 2023 NAO report revealed that HMRC omitted over £1.5 billion in upfront transitional costs (such as purchasing hardware, training, and agent support) from their 2022 cost-benefit analyses.
• Individual Business Costs: While HMRC estimated a low average transition cost of roughly £109–£280 for VAT-registered businesses, surveys indicated that less than 10% of respondents experienced costs at or below that level.
• Average Cost Increase: Experts suggest the average cost per business could be closer to £1,000 rather than the much lower figures originally suggested by HMRC.

2. Disproportionate Compliance Burden
• Ongoing Fees: HMRC estimated annual compliance costs of around £43, but a 2020 survey found that 54% of respondents estimated costs between £43 and £500, with 20% estimating costs between £500 and £1,000.
• Agent Costs: For many, the cost of involving agents to manage the transition and quarterly reporting was far higher than HMRC’s estimates, with 70% of agents reporting unrecoverable costs of over £100 per client.

3. Misjudged Operational Impact
• Time Savings Myth: HMRC claimed MTD would save time, but surveys reported that 55% of businesses experienced a decrease in productivity, and 90% found it did not reduce errors.
• Underestimation of Complexity: The requirement to move from simple, often manual systems to digital record-keeping was more challenging than anticipated, particularly for smaller, less digitally-capable businesses.

Conclusion
The consensus from industry bodies (such as the ICAEW and CIOT) and the NAO is that HMRC’s planning was flawed, leading to a massive underestimation of the "real" costs for businesses to become compliant with digital tax reporting.

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HMRC's cost forecasts are poorer than West Ham's results this season.

Some posts don't age very well and in this case long may that continue .

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I suspect politically this will hit Labour's 'oh shit we are upsetting voters' radar as smaller taxpayers are sucked into the MTD vortex in years to come...likely to be the individuals least able to afford the additional costs.

By roger brisley
10th Apr 2026 21:28
Great. I’m now retired (since 2017) and have been completing my and spouses returns with no problems using HMRC tax software in an evening. Now I’ll have do quarterly returns for both of us plus the adjusting return on top of the normal tax return, pay for some additional software… and will the result in terms of our tax liabilities be any different? Of course not but as I can’t be arsed to do all this for free I’m going to have to pay someone still in practice to do it for me/us. I just don’t understand the point and am quite put out that I am forced into this for no benefit to either HMRC or us.

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On my drive to work, I have the choice of pretending to either be:

-driving a fairground dodgem car and try and weave around huge potholes, or

-Evil Knievel soaring over the Grand Canyon in my rocket propelled machine.

Some are so deep I half expect an Australian duck-bill platypus from the other side of the world to emerge above ground.

The condition of our roads is symptomatic of the malaise left by the Tories and continued by Labour. Both parties have demonstrated they are unfit to govern and clueless. The imposition of more and more red tape on small business e.g MTD4IT just demonstrates how out of touch they are.

As a starting point, I would:

-introduce red and yellow cards issued by the speaker if the PM does not answer a question at PMQs..has there ever been a more pointless exercise? Perhaps the BBC could add the graphic of a duck seen on cricket coverage for a zero-run batsman, as Keir (or his soon to be replacement) is dismissed from the chamber with MPs chanting cheerio, cheerio, cheerio.

-abolish the honours system for people just doing their job (and seemingly very badly in many cases...nice one Olly, Jim etc).

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Exhibit A

By ireallyshouldknowthisbut
14th Apr 2026 15:44
There does seem to be a movement to completlely hammer small businesses into endless red tape and issues under the disguise of tech advancements, which might save time with businesses with high volumes of transactions, but for low volume its just another big overhead and barrier to business.

One person businesses simply cant be expected to cant master all this tech and understand all the complexities.

Quite what ever happened to low barriers to entry to trade in the UK, I really dont know.

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Exhibit B

By newbeemee
14th Apr 2026 14:23
Can government please STOP all this and let businesses of all shapes and sizes, but especially SMEs just get on with earning a living

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Exhibit C

By OrmeGoat
14th Apr 2026 09:19
When the hell will governments stop acting like the Stasi and realise that small businesses are not small versions of large businesses?

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By kevinringer
28th Apr 2026 09:48
"Reduce risk, don’t lower standards"

Unfortunately that has already happened to make the square peg of MTD fit the round hole of UK taxation. HMRC discovered that they knew a lot less about businesses and tax than HMRC thought it knew, and no matter how hard they hammered, they couldn't get it to work, so they lowered standards to make it fit, kind of. Default cash accounting. Basis period reform. Just compare the ideals of what was announced with MTD compared to what has happened. Take for example spreadsheets. When MTD was announced, HMRC put spreadsheets in the same category as manual records possibly because spreadsheets depend on the skills (or lack thereof) of the person who created them and prone to error, but HMRC had to accept spreadsheets and now that's what the majority of my MTD VAT clients use. We've reached the point where HMRC consider digital to be more important than accuracy: HMRC accept any old rubbish as long as it is digital rubbish.

Replying to kevinringer:

By Southwestbeancounter
28th Apr 2026 10:18
Spot on Kevin!

It's ridiculous it really is and how we got to this stage without our professional bodies wading in years ago I'll never know!!