About 400,000 landlords and self-employed people have failed to register in time for today's Making Tax Digital deadline, prompting accountants to accuse HMRC of running an ineffective awareness campaign.

The Association of Chartered Certified Accountants (ACCA) says HMRC figures show this is far short of the 850,000 taxpayers mandated to join the scheme so far, The Accountant reports.

Although the government has confirmed a 12-month 'soft-landing period' where late filing points won’t be issued for initial quarterly updates, taxpayers mustn’t treat this as a free pass, according to ACCA senior technical advisory manager Yogesh Dhanak.

“HMRC can still penalise businesses for failing to keep digital records or for deliberately withholding information. Crucially, submitting ‘nil’ placeholder returns with the intention of fixing the numbers at the end of the year is completely unacceptable. These updates must be fully reconciled transactional submissions tied directly to bank feeds.”

Urgent

The accounting body wants HMRC to provide urgent clarity on these requirements before handing out any penalties and says its awareness drive hasn’t reached enough affected taxpayers.

“The fact that less than half of mandated taxpayers have registered highlights a clear deficiency in HMRC’s awareness campaign, exacerbated by delays in getting official systems and guidance ready,” adds Dhanak. “While digital record-keeping should ultimately help small businesses reduce errors and better understand their performance, the immediate future looks incredibly challenging.

“If HMRC cannot successfully onboard higher earners now, the problem will severely compound when lower-earning sole traders are dragged into the scheme in 2027/28.”

Rising

It has also identified rising costs as a major barrier as it explains many people will need a qualified accountant for the first time just to remain compliant.

“Navigating the market of nearly 90 HMRC-approved software options is also proving to be a minefield,” he adds. “Furthermore, many free or cheaper software options feature limited functionality, often blocking professional agents from accessing the system to verify data before it is submitted.”

The government has previously explained that more than 259,000 landlords with a turnover of above £50,000 will need to sign up for the 2026/2027 tax year. The total number with any property income affected by MTD for Income Tax include 118,000 whose only source of qualifying income is property rental, and 141,000 who have both self-employment income and property income, such as a builder who also rents out a property.

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