Making Tax Digital

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By FactChecker
06th Aug 2026 21:02
"And unfortunately this is only the beginning" ... but to mangle an old quote:
* is it the beginning of the end? because it sure doesn't look like the end of the beginning?

How a 'live' system can have quite such a substantial 'known bugs' list (I'm talking about those within HMRC's sphere of responsibilities - not individual commercial software developers) ... and with so few signs of them being slowly tackled ... should be beyond credible belief?

According to several recent threads on here (from agents and backed-up by software developers), there's a fundamental problem if you select 'calendar' for your 1st QU (actually for all QUs this TY).
I'm not clear if this is dependent on other additional factors, or indeed on all the symptoms, but in essence HMRC's system then refuses to accept the QU because it's still expecting a 'standard' period (so thinks the dates don't match).
I'm only quoting others on here ... but HMRC have acknowledged the bug at least a month ago - and yet are currently only 'hoping to have a fix by the end of September'!

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Reactions to Labour's MTD4IT red tape tsunami:

By susanrenew
06th Aug 2026 18:02
As an accountant working as a self employed bookkeeper I’ve just reduced my clients so that I’m below the level at which I will have to comply with mtd, so in effect HMRC will receive reduced tax contributions from me. In addition some of my clients have decided to retire altogether rather than them having to comply with these new regulations.

By JD
06th Aug 2026 19:30
Those that are of a mind to not comply will simply trade in cash. To put it simply if you increase the cost and burden of compliance, then inevitable you also increase the numbers of people who do not wish to play the game.

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That word again...clusterfuck....Labour isn't working.

By OrmeGoat
07th Aug 2026 14:22
And HMRC are sending texts to clients, even though I can't submit the returns because of HMRC software faults.

"You must send us your income and
expenses update for your self-employment
income through your software.
You need to send your quarterly update to
us through your software on or before 7
August 2026.
It's your responsibility to make sure you
send us all necessary updates.
If you have an agent, you may want to discuss this reminder with them

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Clusterfuck!

By TessaW
07th Aug 2026 17:03
Chased client & found she went into hospital on Monday with heart problems. She had registered but hadn't done link from Xero. I managed this ok & submitted, after changing to quarterly quarters; but I assume that the dates change means that HMRC can't cope their end so Xero says submitted but HMRC tax report says check messages & messages give Error 404. Glad that I did the submission so I can explain to client when she hopefully gets better.

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Be nice to hear from HMRC's J-P M on this and not his stooge who maintains everything is fine.

By SimonP
07th Aug 2026 20:15
I use TaxCalc and have been getting repeated errors which I have conveyed to TaxCalc but apparently they are so overloaded with support enquiries that I am not getting my issues sorted.

I have now resorted to using Google AI which, believe it or not, has actually been suggesting some solutions to try, which TaxCalc has so far failed to do.

Thank goodness there will be no penalties because there is no way that any QU 1 filings will be made today, the deadline.

And for what? What is the point of HMRC saying that figures do not have to be accurate if we cannot even file figures at all, accurate or not?

Personally I have wasted several hours of unbillable time and getting nowhere. It is not the money, because I really couldn't care less about that. Plus I could have been filing tax returns or sunning myself in the back garden.

It is the principle of making me and other accountants do all this stuff and for what that is infuriating me. And clients are going to be asking why the QU 1 has not been filed on time. And then even more time will be wasted explaining what has or hasn't occurred. Maybe I'll just send them this article as an answer.

What a freaking mess.

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By Nebs
08th Aug 2026 10:26
Dateline 8th August 2026, 10.15am. I just asked Google AI: "what percentage of taxpayers missed the submission deadline for the 7th August 2026 MTD submission?"

Have a guess, what do you think, before you read the answer?

AI Overview Approximately 60% of eligible taxpayers missed the first Making Tax Digital (MTD) for Income Tax submission deadline on 7 August 2026.Out of roughly 864,000 sole traders and landlords with qualifying incomes over £50,000 who were mandated to join Phase 1 of the program, official figures leading up to the deadline showed that over 400,000 individuals had still not registered, resulting in more than four out of ten taxpayers completely missing from the digital system at the final hour.

It could be "less worse" than that, as AI seems to have drawn its answer from information published a few days before the deadline. But there will certainly be a brainstorming session at HMRC this weekend - How can we put a positive spin on these terrible figures?

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Replying to Nebs:
Tornado
By Tornado
08th Aug 2026 10:54
No Doubt Craig and his Team will try and spin this as a success and it is in a way.

They have successfully changed a long standing successful tax administration system (Self Assessment) into a complex, confusing, muddled and uncontrollable mess of spaghetti that is only fit for the waste bin.

Well done Craig and your Team.

And there are still some 2.5 million 'Customers' who will be mandated to Register within the next 20 months !!!!

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Why do the idiots become our decision makers?....posts like this are so obviously correct.

By Locutus
08th Aug 2026 17:08
MTD for IT doesn't particularly benefit affected sole traders / landlords or, for that matter, even HMRC. As we all know, those affected need to pay for accounting software, learn how to use it (or pay an accountant to do it for them) and file unnecessary quarterly reports that HMRC don't even use.

I suppose one day HMRC will collect tax from those quarterly submissions, but that is some years away. When that happens, it will be riddled with unrepresented taxpayers "forgetting" to reconcile that large sales receipt that arrived 2 days before the quarter end or not being sufficiently curious when the software codes their drawings as wages and gives them a lower tax liability than they feared. I have always found HMRC's justification that digital *always* means accurate to be naïve at best, as it rather depends how competent the bookkeeping is.

Saying that, I am a fan of accounting software for the right businesses. All of my trading limited companies use it, as do all of my VAT-registered entities. Perhaps there might have been some mileage in mandating that any business turning over more than, say, £50k annually be required to maintain their accounting records in accounting software - but drop the silly quarterly reporting.

My landlords and micro-traders rarely use accounting software, as both they and I find that spreadsheets, delivered to me annually, sufficient. The number of transactions and complexity of their operations often don't justify using software. This works fine, given that their tax liabilities are obviously also calculated on an annual basis. Although there is the argument that taxpayers want to know their tax liability promptly, I have never found that it translates to many bringing in their records in April, May or even June, unless they have a mortgage application that needs to be prepared.

I hope that the whole process gets a re-think before the enrolment threshold drops to £30k, otherwise it will be a bloodbath of non-compliance by mostly unrepresented taxpayers. I'm already dumping one time-consuming client in advance of that threshold drop, as getting MTD working for them will involve even more demands on my time.

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I just want to write Gordon Ramsay's favourite word in the largest font/brightess colour when I read these posts. Our politicians/HMRC's leadership should be put in front of a TV camera and made to answer questions on these taxpayer experiences.

By gillsoffice
09th Aug 2026 16:17
I had 5 clients who had to sign up this year. All small self employed under the vat reg limit and with transactions which don't warrant bookkeeping software.
3 kept their income and expenses on spreadsheet - they got their spreadsheet to me and I filed for them via bridging software. Not too painful.
2 decided they'd buy the hype and try out Xero & Freeagent. One hasn't had the time to learn the software (he's too busy working!), so couldn't supply the info - the 1st submission will be late and he may resort to spreadsheet for the future.
The other client, who I feel very sorry for, has tried their best with Xero but really doesn't understand all the bookkeeping entries she needs to make to make it make sense (eg bankings don't agree to sales invoices due to deductions by her customer). Why should she know?; she's a busy costume designer not a bookkeeper. She previously kept a book with 1 page for income, 1 page for motor expenses etc etc and told me ' I knew at a glance where I was with my book and now I don't have a clue'. Obviously I have tried to help her and suggested zoom meetings to point her in the right direction, but her profits are not enough to sustain this additional cost. I'm advising her that it might be easier to replicate her 'book' on a spreadsheet, but at the end of the day there still isn't any benefit to her, just extra cost and lost time for her to learn how to do it.
I really wish I (or my clients) didn't have to get involved with MTD but as I get towards the end of my career I don't want to ditch my clients, most of which have been with me for over 20 years and approaching their own retirement, so I'll do my best to support them and will no doubt write off a lot of my time. Thanks a lot HMRC!

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By Taxaider
10th Aug 2026 13:46
After weeks of messing around fighting with a number of software products it is now abundantly clear MTD has confused digitisation with regulation. Instead, accountants are spending increasing amounts of time fixing HMRC registrations, authorisations, software inconsistencies and submission failures—costs ultimately borne by the taxpayer. We saw this coming. If the quarterly updates cannot be shown to produce additional tax revenue or materially reduce errors sufficient to justify those costs, they should be abolished. The message to Healey & Reynolds is simple and clear - "scrap compulsory quarterly reporting".