Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.

While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.

 

 

Making Tax Digital Sign-Ups

2 days before the deadline just over 500,000 people were registered for MTD. That means that around 40% of relevant taxpayers probably missed the deadline.

Anyone who fails to sign up by the deadline will be contacted by HMRC by post.

This means that an estimated 364,000 of the £50,000 income cohort could potentially have missed the deadline. Having said that and considering that HMRC has had a major drive to get taxpayers on board before this Friday’s deadline, HMRC still says it’s ‘on target.

864,000 taxpayers were identified by HMRC as within scope of the new quarterly reporting rules.

The critical 7 August deadline was for taxpayers to submit their first quarterly update under MTD with income covering the first quarter of the 2026-27 tax year and must file with compatible software as HMRC is not providing online filing.

Although HMRC confirmed there will be no penalties for missing a quarterly update deadline during the 2026-27 tax year, affected taxpayers are still expected to file their updates and will be charged interest on late payments. There is also major concern about the fact taxpayers cannot file ‘nil’ placeholders in the MTD system.

However, HMRC can still penalise businesses for failing to keep digital records or for deliberately withholding information.

From 6 April 2027, points-based penalties will apply where taxpayers miss a quarterly deadline.

Taxpayers will receive one penalty point for each ‘missed’ quarterly deadline. Once four points are accumulated, a £200 fixed penalty is charged. Points expire after a ‘period of compliance’.

 

 

How Chaotic was the First MTD Deadline

Compliance with the first MTD filing has been a learning experience with all filers. It should get easier and everybody  gets used to the new system. HMRC will also have learnt a lot and it would be natural to expect that they will be trying to eliminate all the glitches.

Teething problems with the software inevitably led to filing taking longer than expected.

There was confusion over reporting dates, standard and calendar quarters, cash and accruals and how the quarterly figures would eventually feed into the year-end return.

Concern was expressed because the legislation states that whichever option you chose for your quarters applies to the ‘taxpayer’, not the ‘business’ whereas MTD permits the selection of different quarters for each business. Different software could therefore interpret the same rules in different ways. It’s clearly not ideal that digital processes do not appear to match the rules behind them.

HMRC’s confirmation gap is the space between software saying an update has been sent and HMRC showing that it has been received. There isn’t a standard HMRC acknowledgement following submission with no universally recognised confirmation from HMRC. Even the terminology varies from one software provider to another.

There was also a significant gap between the quarterly update being submitted with the software showing a status of ‘success’ but on checking the personal tax account, it showed as ‘not received’.

Some people have been blocked by registration problems and in some cases been refused registration even though their turnover was over the threshold or being registered for the wrong year.

Better luck next quarter!

 

 

Is Incorporation the Answer to MTD

Making Tax Digital (MTD) for income tax was supposed to modernise the tax system.

A survey of 1,000 in-scope sole traders found that 23% had already set up, or begun setting up, a limited company partly or wholly due to MTD. A further 57% had explored or considered incorporation at least partly because of the reforms.

Meanwhile, just under 45% of affected sole traders say the reforms have made them consider leaving self-employment altogether and returning to salaried work.

Limited companies are not currently within scope for MTD for income tax, making incorporation an alluring way out of the quarterly reporting regime.

It appears that incorporation is increasingly being viewed as an escape route to MTD but in the end it isn’t a shortcut to less admin. Limited companies face their own complex filing obligations with a broader set of tax, accounting and filing requirements.

From a tax perspective, the benefits of incorporation have been steadily eroded, to the point where there is no longer a clear point at which it clearly makes sense to incorporate. All the circumstances need to be considered and modelled, including the profit level of the business and what will be withdrawn, how and by whom.

A limited company may sit outside MTD for income tax and swerve the quarterly filing requirements, but incorporation brings corporation tax returns and computations, statutory accounts and Companies House filings, alongside additional time, professional fees and software costs.

The survey also suggest some sole traders are questioning self-employment. Just under 45% of respondents said MTD had made them seriously or somewhat consider returning to permanent, salaried employment.

 

 

Companies House Delays Presenter ID

Companies House has pushed back some ID verification requirements for those outside the mandatory company director rules by a year from the original November 2026 deadline.

Companies House has delayed by at least a year the plan to require identity verification of presenters, previously  a compulsory part of filing any document. Presenters cover those people filing accounts and official CH documents who are not designated company directors.

At the same time, it has delayed bringing in a new rule to require third party agents filing on behalf of companies to be registered as an authorised corporate service providers (ACSP). This is also going to come in by November 2027 under the latest timetable.

 

 

Code of Practice for Single Sex Spaces

The Equality and Human Rights Commission (EHRC) has updated the Statutory Code of Practice to include statutory guidance on single sex spaces targeted specifically at ‘services, public functions and associations’ with effect 5 August 2026. There are also plans to update the guidance for employers ‘in due course to reflect developments in the law’.

The new EHRC guidance affects provision of single sex spaces such as toilets and changing rooms in sports clubs, hospitals and public areas. It means that these spaces should be organised by biological sex, and not gender identity.

The Code provides practical guidance on how the Act applies to services, public functions and associations. It explains the steps organisations should take to ensure people are not discriminated against, harassed or victimised in relation to the protected characteristics set out in the Act.

The Code, although not directly applicable to employers, provides greater clarity on how organisations can navigate what is often a difficult balance between the rights of different groups in the workplace.

 

 

More MTD Did You Know…

Those who are currently making SA returns will not be automatically enrolled into MTD income tax. Every taxpayer has to be signed up individually.

HMRC should already have contacted taxpayers that it considers must sign up. The first batch of mandation letters were sent in November 2025 to taxpayers who filed their SA tax return for 2024/25 by the end of August 2025. Mandation letters were sent to taxpayers who file their 2024/25 SA tax returns between September 2025 and January 2026 in February and March 2026.A further batch of letters was issued to late filers.

Although HMRC is sending mandation letters, it is the taxpayer’s responsibility to:

• check if they are required to comply with MTD income tax from April 2026; and
• sign up for MTD income tax.

If a taxpayer believes that they are required to comply but has not received a mandation letter, they should sign up for MTD income tax.

It is understood that HMRC will take action to sign up mandated taxpayers who miss the sign up deadline. If quarterly updates have been missed, there could be penalty point implications and possibly also record keeping penalties. However, penalty points will not apply to quarterly updates filed late for the 2026/27 tax year.

For jointly held properties each individual is required to comply with MTD income tax requirements for their income from property. There is no form of reporting by property or portfolio of properties. Each taxpayer’s UK income from property needs to be aggregated before being submitted to HMRC, likewise for income from overseas property.

HMRC has announced two concessions that allow joint property owners to:

• report income (gross) from jointly held properties in their quarterly update while leaving reporting of expenses until the year end finalisation process, and
• create a single digital record quarterly for each category of income from jointly held properties and a single digital record annually for each category of expense from jointly held properties. This removes the need for each joint property owner to create digital records of each transaction.

Note that these concessions only apply to jointly held property. If the taxpayer also owns property in their own name, they will need to keep records and report income and expenses quarterly.

If there are multiple sources of income from property and self-employment separate obligations to comply apply to:

• Each separate trade (equivalent to the requirement to submit a separate SA103 for each trade)
• UK property income (equivalent to the SA105)
• Foreign property income (equivalent to the land and property section of the SA106).

There can be only one set of submissions (quarterly updates) for each obligation. If records relating to one obligation are held in more than one software product, they will need to be combined into one product before the submission is made to HMRC. This may be a problem where records for different divisions of the same trade or records for different properties are held in different systems.

Quarterly updates are required for fixed standard tax year quarters (i.e., to 5 July, 5 October, 5 January, and 5 April). There is an option to elect for calendar quarters if the software product supports it (i.e., to 30 June, 30 September, 31 December, and 31 March). This does mean a bunching of agents’ workloads and any clash with the timing of VAT returns also needs to be considered. The due date for the quarterly updates is 7 August, 7 November, 7 February, and 7 May regardless of whether an election for calendar quarters has been made.

MTD income tax quarterly filing can be different to the VAT filing quarter. The MTD income tax quarters are fixed. The taxpayer could have a different VAT stagger. However, some taxpayers have chosen to amend their VAT reporting to align with MTD income tax deadlines.