Will you be signing clients up to HMRC’s MTD for ITSA pilot?

Accountants react to HMRC’s request to take part in its latest Making Tax Digital for Income Tax Self Assessment pilot.

HMRC is urging accountants and tax agents to take part in its latest pilot to test out Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) before it becomes mandatory – in stages – from April 2026.

The MTD for ITSA pilot was officially launched this April, after it had been previously trialled in June 2022 and subsequently paused a few months later.

Under the pilot, accountants and tax agents whose clients are self-employed and/or landlords with an annual income over £50,000 can now sign up on a voluntary basis. They will need to keep digital records of client income and expenditure, send HMRC quarterly updates via MTD-compliance software, and submit tax returns by 31 January the following year.

HMRC has said it’s a ‘good opportunity’ for accountants to ‘familiarise themselves’ and their clients with the MTD for ITSA before it becomes mandatory, while helping to prepare accountancy practices and be in a better position to support the client base.

Eligibility criteria include:

• client personal details are up-to-date with HMRC
• client is a UK resident and has a National Insurance number
• client has previously submitted at least one Self Assessment tax return
• client is up-to-date with tax records and have no outstanding tax liabilities
• client’s accounting period aligns to the tax year (6 April to 5 April).

But there is a big list of exceptions. Accountants will be unable to sign their clients up if they:

• are in receipt of High Income Child Benefit Charge, claim Married Couple’s Allowance or Blind Person’s Allowance
• have a payment plan with HMRC
• are a partner in a partnership
• are about to go bankrupt or insolvent
• are an MP, minister of religion or Lloyds underwriter
• are a foster carer or are in a shared lives scheme
• have income from a trust
• have income from a jointly owned property or from a furnished holiday let
• are subject to a compliance enquiry
• have variable annual profits due to their profession and therefore use ‘averaging’.

Previous trials have also not proved successful. According to a Freedom of Information (FOI) request, just 115 self-assessment taxpayers had signed up to the initial 2022 trial. HMRC is hoping the latest pilot will encourage significantly more people to sign up to the pilot but this is looking unlikely.

We asked a few accountants if they were intending to sign up for the pilot and put their clients forward.

There may be slippage on test control so taking part carries risk

Chris Demetriou, AAT-qualified Accountant and Co-Founder, Archimedia Accounts

Digitising tax filings seems like a logical step forward but any significant changes also require diligence to avoid unintended consequences. That’s why my partners and I have been cautiously observing the pilot launch.

Naturally, there’s an appeal to gaining first-hand experience before the new system becomes mandatory but equally, rushing into the pilot comes with risks that I can’t ignore as a responsible business owner and advisor.

Some of the concerns raised by professional bodies resonate strongly with me. For example, will the pilot actually test every facet of the upcoming system? Software providers may not have sufficient time to address all issues before next year’s wider rollout. Slipping on testing quality control could lead to unforeseen bureaucratic nightmares down the road.

I want to avoid a situation where participating does more harm than good. If we sign clients up only for their data to encounter glitches that jeopardize important tax compliance, that undermines our focus on delivering consistent, high-quality services. Our reputation is built on trust through transparent communication and reliable solutions – which is harder to ensure in the pilot’s uncertain early days.

Once we see clear evidence that problems have been solved sustainably rather than superficially, I’ll feel much better about recommending involvement.

Verdict: There may be slippage on test control which could lead to huge risks for clients and us as a business.

Risk outweighs possible benefits due to HMRC’s track record

Yiannis Zourmpanos, Chartered Accountant, Financial Consultant and Founder, Yiazou Capital Research

I have mixed feelings about HMRC’s MTD for ITSA. I appreciate the aims to modernize the tax system through digital record keeping and reporting, but based on the delays, complexities, and additional burdens reported so far, I am hesitant to recommend MTD participation for most of my clients at this time.

Although maintaining digital records can make reporting easier, HMRC has come under fire for being opaque and adopting a less-than-customer-focused strategy. Confidence has already been damaged by multiple delays in the implementation. I would need to see a track record of success and a simplification of requirements before recommending clients to participate.

HMRC needs to show the benefits of the pilot to taxpayers and agents while addressing valid concerns. I will reevaluate my recommendation for MTD participation for qualified clients after changes have been made. But in the interim, I think it’s wise to exercise patience.

Verdict: HMRC’s track record has damaged confidence so the risk outweighs possible benefits.

Persuading clients to participate could be a challenge

Katharine Arthur, Partner & Head of Private Client, haysmacintyre

Currently, we do not have any clients participating in the pilot. But we plan to have some signed up before the latest announced implementation date of April 2026.

Persuading clients to participate is a challenge: there have been so many false starts to the initiative, with the start date being delayed often, and for a long time.

Additionally, clients would have to spend additional time filing the MTD quarterly returns – in advance of a statutory requirement to do so!

That said, HMRC, taxpayers and agents participating in the pilot will be key to ensure a smooth introduction of MTD for ITSA, and we welcome HMRC’s aim to broaden the pilot.

Verdict: It’ll be important to participate in the pilot but it’ll be a challenge to persuade clients due to lack of confidence in HMRC and its systems.

Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at [email protected].

Annie Makoff is a freelance journalist and editor.