How to Help Your Clients Comply with Making Tax Digital

Making Tax Digital (MTD) is one of the most significant changes to the UK tax system in recent years, and as a trusted advisor, you’ll most likely be expected to guide your clients through the process. The shift towards digital tax reporting isn’t optional. It’s being rolled out in phases and will apply to most sole traders, landlords, and businesses over time.

Helping clients prepare now avoids last-minute panics and reduces the risk of compliance breaches, penalties, or reputational damage. You’ll be able to more effectively support your clients, safeguard their business, and position yourself as a strategic partner in your clients’ success.

What Is Making Tax Digital (MTD)?

Making Tax Digital is a government initiative requiring businesses and individuals to keep digital records and submit VAT returns, Income Tax Self-Assessment (ITSA), and Corporation Tax information to HMRC through MTD-compatible software. The primary goal is to reduce tax errors caused by manual data entry and outdated record-keeping methods. HMRC estimates that errors and mistakes in business records cost the Exchequer billions each year. Through digitalisation, MTD aims to:

• Minimise errors
• Streamline tax submissions
• Improve transparency and consistency
• Encourage better financial record-keeping
• Make tax administration more efficient, accurate, and easier for businesses and HMRC.

Why Is MTD Important for Your Clients?

Whether your client is a sole trader, a landlord, or a director of a small limited company, Making Tax Digital will affect how they manage and submit their taxes. From 6 April 2026, all sole traders and landlords with income over £50,000 will need to comply with MTD for ITSA, with a further rollout for those earning over £30,000 expected in April 2027. Although there’s no timeline yet, MTD for Corporation Tax will also most likely roll out in the coming years.

Now is the time to help clients understand the implications, assess their readiness, and adopt the right tools because non-compliance can result in:

• Points-based penalties for late submissions
• Financial penalties for errors in digital records or failure to use MTD-compatible software
• Interest charges on overdue tax
• Potential HMRC investigations
• Reputational damage.

In short, failure to comply with Making Tax Digital can become a costly liability.

Common Client Challenges with Digital Tax Submissions

While the long-term benefits of MTD are clear, the transition can present several challenges for your clients. Some business owners may not even know what Making Tax Digital is. Recognising these common hurdles will enable you to offer targeted and practical support.

Lack of digital skills

For some clients, especially older business owners, the digital skills required to navigate MTD-compatible software might be out of their comfort zone, especially if they’re unfamiliar with cloud software. You’ll need to feel out each client’s understanding of the tax law changes, and you may need to do some hand-holding initially to set them up for success.

Moving away from manual records

Clients who are used to keeping records manually, such as handwritten paperwork or Excel spreadsheets, face a profound shift in their habits, processes, and workflows. They might underestimate the time and discipline required to move to digital record-keeping.

Choosing the right software

There’s no shortage of MTD-compatible software on the market – Xero, QuickBooks, FreeAgent, Sage, and more – but not every platform suits every business, and some offer free versions while others don’t. Guiding clients in selecting the software solution that best suits their specific needs and technical capabilities will be a critical aspect of your Making Tax Digital support.

Keeping up with compliance

Your clients might not be aware of the latest updates, which means they’ll need your guidance. They might also struggle to keep their digital records and submissions up-to-date, misinterpret guidelines, miss deadlines, or overlook important requirements. Some clients might assume their current setup is compliant when it’s not. Whatever the struggle, they will need support to keep up during this transition period.

Practical Steps to Help Your Clients with Making Tax Digital

The MTD regulations are a serious shift in how clients manage their finances. While HMRC provides the framework, clients will need your expertise and guidance to translate those rules into practical action. Here are some steps you can take to ease them into the new way of doing things.

Step 1: Educate clients on the MTD requirements

Host workshops, webinars, or one-on-one meetings to explain the Making Tax Digital regulations and how they potentially affect your clients’ businesses. You’ll need to clearly articulate the deadlines and the requirements for digital record-keeping and submission. Consider sharing guides and templates that break the process down into manageable steps.

Step 2: Set up digital record-keeping

While HMRC does not endorse or recommend any one product or software provider, they have published a list of MTD-compatible accounting software products. Clients may look to you to recommend the best option for their industry, turnover, and digital literacy. You’ll need to consider the cost, ease of use, and software features that best fit their needs.

You might find that many of your clients would benefit from some training – maybe short virtual sessions or screen-share tutorials. Demonstrate some basic tasks like uploading invoices or generating reports to get them started. You could also assist with the initial software setup.

Step 3: Regularly review client progress

Set up monthly or quarterly check-ins to ensure your clients are on the right track with their Making Tax Digital record-keeping. Regular reviews can identify potential errors early, and being on-hand to troubleshoot technical issues (or answer questions) provides an opportunity for further guidance and support. Help clients understand what their digital records tell them – cashflow insights, tax liabilities, overdue invoices. This adds advisory value beyond compliance.

The Benefits of HMRC Income Tax Changes and Compliance

These new tax laws are an opportunity for you to enhance your advisory services and strengthen client relationships. By guiding clients through the Making Tax Digital transition with clarity and care, you reinforce your role as a proactive partner in their success.

By staying compliant, they’ll avoid late filing penalties and interest charges, and maintain a clean record with HMRC. Digital records and better record-keeping can also offer real-time insights into cash flow, expenses, and profitability, encouraging smarter business decisions – an advantage you should highlight to encourage client buy-in.

How ICPA Membership Supports Making Tax Digital Compliance

ICPA is committed to providing members with the resources and support needed to navigate MTD compliance and provide the highest level of service to your clients. Keep your knowledge current through on-demand training for accountants and ongoing CPD provided as part of ICPA membership benefits.

The training courses will help you stay up-to-date with regulatory changes and technical best practices. ICPA members also get access to Tolley’s Tax Library, the UK’s most trusted catalogue of accountancy and tax information. Tolley’s has recently released their Making Tax Digital for income tax (MTD IT) guidance, which should help support you and your clients through the MTD transition.

Finally, our advice lines are available to provide technical support so you can confidently advise your clients on the most suitable solutions and troubleshoot any technical challenges they may face. Guidance on compliance best practices will help your clients avoid penalties and keep up-to-date with the specific rules that may apply to their business type as MTD expands to ITSA and Corporation Tax.

Encourage your clients to go digital with confidence

With support from ICPA’s accounting network, you don’t have to navigate this journey alone. Our resources and technical expertise are here to help you strengthen your client relationships, expand your service offerings, and future-proof your practice. ICPA has released an MTD guide specifically for ICPA members to help you navigate these changes. The guide provides a comprehensive overview of the upcoming changes under MTD IT.

The ICPA guide explains the phased implementation timeline based on qualifying income thresholds, the new requirements for quarterly reporting, and the replacement of the annual tax return with a finalisation statement. You’ll also find details on:

• Quarterly Reporting: The frequency, deadlines, and required information for income and expenses reporting.
• Finalisation Statement: Explanation of adjustments, claims, and the filing deadline for the new annual submission.
• Affected Individuals: Criteria for inclusion based on qualifying income and exemptions for certain groups.
• Reporting Categories: Breakdown of income and expense categories for non-property, property, and retail businesses.
• Software Requirements: Guidance on choosing compatible software for digital record-keeping and submissions.

If you’re not yet an ICPA member, we encourage you to contact us and sign up to get the MTD guide, and learn how ICPA can support you and your clients through the Making Tax Digital transition.