Challenges and Considerations in MTD

Building on Registration and Setup for MTD, where seamless digital connections are key, we now address potential hurdles in Making Tax Digital. As a UK taxpayer, recognising these issues early helps you prepare effectively.

Penalties in MTD

Non-compliance with MTD triggers penalties, including a points-based system for late submissions: one point per missed deadline, £200 fine after threshold. Late payments incur 3% interest after 15 days from April 2025. For VAT, similar rules apply; ITSA follows from 2026.

STAT: HMRC plans further penalty increases to encourage timely filing.

Delays in MTD Rollout

MTD has faced multiple postponements: ITSA starts April 2026 for >£50,000 income, 2027 for >£30,000. Corporation tax scrapped in July 2025. No further delays expected, but expansions to £20,000 in 2028 loom. Check timelines in Making Tax Digital for Income Tax (ITSA).

Costs of MTD Compliance

MTD involves transitional costs around £285 and annual £115 for affected businesses. Small firms average £4,500 yearly on tax admin, plus 44 hours. Software fees vary; bridging tools cheaper. For specifics, see Compliant Software for MTD.

Support Challenges for MTD

HMRC support faces criticism: declining productivity, lost trust, and rushed timetables without feedback. No online tax return for ITSA; quarterly burdens concern many. Accountants view MTD as top challenge. Service issues tracked at gov.uk

MTD for Partnerships

Partnerships under MTD for ITSA require partners to report individually based on share of income. Digital records for partnership accounts are essential. Similar to self-employed, with quarterly filings from 2026/2027. For niche partnerships, see Specific Scenarios in MTD.

Making Tax Do-able with PJL Accounts

PJL Accounts navigates MTD challenges, offering penalty avoidance and cost-saving advice. Clients say: "PJL resolved our support queries swiftly." Rely on us for resilient setups.

Guided Preparation Steps

✅ Step 1: Check if You’re Registered

  • New VAT registrations are auto-enrolled into MTD.

  • If you registered before April 2022 and haven’t switched, you need to act now.

✅ Step 2: Register for MTD for VAT (if needed)

  • Use your Government Gateway login

  • Sign up here: Sign Up with HMRC

  • Register at least 7 days before your next VAT Return is due

  • Wait for HMRC confirmation (usually within 72 hours)

✅ Step 3: Using an Agent?

  • We can register and manage MTD for you

  • You stay hands-off—we do the admin and handle compliance

If challenges arise, reach out to us for tailored assistance.

Remember we are here to enhance your work life balance. We have three ways to get you ready for ‘Making Tax Digital’.

Frequently Asked

  • Points-based: £200 after threshold; interest on late payments.

  • Unlikely; ITSA firm for 2026/2027.

  • Around £4,500/year in admin; transitional from £285.

  • Facing challenges and scrutiny; use agents (PJL Accounts) for help.

  • Check Specific Scenarios in MTD or Specific Audiences for MTD.

Reducing the stress of your Making Tax Digital journey

Addressing MTD challenges ensures compliance and savings. Ignoring them leads to fines and stress. Contact PJL Accounts for expert support today.