MTD for Income Tax: Don’t risk going it alone with tax returns!
With the first filing deadline for Making Tax Digital (MTD) for Income Tax fast approaching, many sole traders and landlords are entering a critical compliance phase.
For those within scope, this is no longer about preparing - it’s about delivering accurate, compliant submissions on time, every time.
With a growing range of DIY software solutions available, one question is becoming increasingly important: is software alone enough, or is adviser support now more critical than ever?
Software vs adviser
MTD requires taxpayers to use digital tools to capture records and submit quarterly updates. Software is essential - it enables data capture, reporting and submission to HMRC. But software alone does not guarantee accuracy, compliance or confidence.
What we are seeing in practice is clear: Software helps you file. Advisers help you get it right.
What we’ve learned
We’ve been at the forefront of MTD for Income Tax - not only preparing clients, but actively shaping how the requirements work by:
- Supporting our clients through the HMRC Beta testing phase, identifying challenges and feeding back improvements directly to HMRC and our software partners
- Developing our MTD service propositions working closely with Xero, our strategic partner to refine the integration of technology into our client focused solutions.
- Launching a range of tailored service packages to meet the wide range of needs of MTD tax payers – one size does not fit everyone!This extensive planning and preparation gives us first-hand insight into where software supports compliance and where it falls short, particularly for sole traders and landlords managing submissions themselves.
The reality of MTD: key lessons
Software is essential but not enough
Digital tools rely on the correct setup, consistent, high-quality data and ongoing review.
Without this foundation, errors can pass straight into submissions, particularly in DIY scenarios.
Software enables compliance, but it does not validate decisions, interpret rules or identify risks. Combining technology with expert review ensures submissions are accurate and avoids unexpected tax bills and outcomes later.
It’s a behavioural shift, not just a system change
MTD fundamentally changes how tax is managed:
- Record keeping is now ongoing, not annual
- Data is reviewed quarterly
- Issues arise earlier and more frequently
Businesses taking a DIY approach need to stay consistently on top of records, while those supported by an adviser are typically better placed to manage this shift.
Complexity shows up quickly
Real-life scenarios, such as multiple income streams, property and trading income combined or tax adjustments require interpretation and judgement.
While software can process data, it does not apply context or professional judgement.
As complexity increases, so does the need for specialist expertise to avoid costly errors and ensure the correct treatment is applied, particularly for those managing submissions themselves.
Errors can compound
With quarterly reporting, errors made early can repeat across multiple submissions.
Under a DIY approach, errors may go unnoticed until later, increasing the effort to correct them, the risk of HMRC scrutiny and the likelihood of paying the wrong tax.
Regular review and early intervention are key. A structured approach with ongoing expert input helps identify and correct issues before they escalate.
Why the first filing deadline matters
This first submission sets the foundation for your entire MTD process.
Get it right, and you establish:
- A more accurate view of your future tax liability
- Clean, accurate data
- Efficient processes giving you time back
- Confidence in future submissions
Get it wrong, and you risk:
- Incorrect tax payments at final submission time
- Repeated and compounded errors taking time to unravel later
- Increased exposure to penalties if you miss deadlines
- Greater admin burden
- Increased risk of a tax investigation
The difference between filing and getting it right
There is now a wide range of software available to support MTD, making DIY filing more accessible than ever.
However, software does not replace expert review, technical interpretation or proactive tax advice - particularly when issues arise of corrections are required.
Area | DIY software | Working with an adviser and progressive technology |
|---|---|---|
Compliance | Enables submission | Ensures correctness and compliance |
Accuracy | Depends on user input | Reviewed and validated |
Risk | Higher risk of errors, when you don't know what you don't know! | Reduced risk with expert oversight |
Complexity | Difficult to manage alone | Supported and interpreted |
HMRC enquiries | Self-managed and expensive | Expert representation and Tax Investigations Service to cover unexpected costs |
Tax efficiency | Limited | Optimised with advice |
Confidence | Lower | High – with ongoing support |
Adding value beyond compliance
MTD also creates an opportunity to move from reactive to proactive tax and business management.
We support clients with ongoing tax planning throughout the year, real-time visibility of tax positions and identifying opportunities to improve efficiency and reduce liabilities.
This ensures tax isn’t just about reporting but ensuring you’re paying the right amount of tax and planning effectively for the future.
We’re here to help
With the first filing deadline approaching, now is the time to act. Leaving everything to the last minute increases risk and reduces the opportunity to put things right.
As the UK’s #1 adviser for MTD for Income Tax, we support clients with:
- Software selection, setup and migration
- End-to-end compliance
- Ongoing expert review
- Proactive tax planning
- Advice and support if anything needs correcting or is challenged by HMRC
Get in touch with our team today to ensure you are fully prepared and supported at every stage.
Tax Investigations Service
As MTD introduces more frequent reporting and reliance on software, the risks of errors and HMRC enquiries is likely to increase – particularly for those taking a DIY approach.
Our Tax Investigations Service offers full fee protection for HMRC enquiries and access to specialist support when you need it most. From as little as £80 per year, it provides valuable peace of mind in the event of you being selected for review or investigation.
To find out more, get in touch with our team today.
