Have any of your clients received an online message or letter from HMRC confirming they have signed up to Making Tax Digital (MTD) for Income Tax?
As an accountant with sole proprietors or landlords, some of them may soon contact you with questions about what this means and what to do next.
Some of them may be surprised that HMRC has contacted them. Others may be afraid that they will face punishment or have done something wrong.
HMRC will automatically enroll taxpayers whose records show that they should use MTD for income tax but have not signed up for the service themselves or through an agent.
In this article we discuss how HMRC-led MTD registration works, what actions your clients need to take and how your practice can support them.
Here’s what we cover…
Overview of HMRC-led enrollment into the MTD scheme
As you know, the MTD for income tax came into force in April 2026.
An individual must generally use it if they are registered for self-assessment, receive income from self-employment or property, their total allowable income for the 2024/25 tax year was more than £50,000 and no exemption applies.
For all eligible taxpayers who have not already registered for MTD themselves or through an agent, HMRC confirmed that they will register them from September 2026.
The current auto-enrolment applies to people who need to use MTD for income tax for 2026/27, whose records show qualifying income in excess of £50,000 in 2024/25 and who have not yet registered.
The registration confirmation alone does not constitute a penalty notice. According to HMRC, there are no penalty points for missing the quarterly update deadlines for 2026/27.
However, affected customers must continue to maintain digital records, send all required quarterly updates before filing the tax return, file the tax return on time, and pay the taxes due within the appropriate deadline.
What HMRC’s registration with MTD actually means
An important point to make to all of your clients who are automatically registered by HMRC is that this does not mean they are fully set up for MTD for income tax.
HMRC have registered customers with information they already have and the process involves initial registration. This does not complete the MTD setup or required compliance work.
This is where you come in – to review this information and complete a series of follow-up steps. Your practice can play an important role here and help your clients meet their obligations.
Some of them may assume that the communications from HMRC confirm that everything has been taken care of and they are ready to use the service.
But actually, additional work still needs to be done, including:
- Verifying the customer’s authorization and MTD status in the agent service account
- Verification and confirmation of the client’s sources of income
- Set up digital records and create them from the beginning of the tax year
- Selection and authorization of MTD-compatible software
- Identification of missed obligations.
What accountants need to do when clients receive a letter from HMRC
1. Check your client’s HMRC records and agent authorization
Firstly, check that the records held by HMRC for your client are up to date.
Use the brokerage service account and relevant Income Tax Service MTD to confirm that the necessary authorization is in place, verify the customer’s identity details and status and verify the sources of income created by HMRC.
And let your clients know that they should contact your practice immediately if they receive communications from HMRC about auto-enrolling in MTD, particularly if anything has changed since their 2024/25 tax return.
Examples of this are:
- Your self-employment or real estate business has ceased trading
- You have a new self-employment or a source of income from real estate
- The information about the source of income is incorrect
- They believe they are entitled to an exemption from the MTD.
Identifying and resolving issues now can reduce the likelihood of compliance issues arising later in the tax year.
2. Check software readiness
The HMRC registration process provides your practice with the opportunity to identify clients who still rely on paper records or have irregular accounting processes.
As you know, your customers need to use MTD compatible software and this is a good opportunity to find out who needs to get started.
Verify that the product (or combination of products) you select supports all of the client’s relevant revenue streams, their billing cycle, and the tasks the client or your practice will perform.
A complete solution like Sage Sole Trader could simplify the process for your customers.
It can help them record and categorize transactions, prepare and send supported quarterly MTD updates, and display an indicative tax estimate based on the information entered.
However, your customers remain responsible for checking the documents for completeness and accuracy and for adhering to the submission and payment deadlines.
If you manage multiple MTD customers, using a consistent software platform can help you standardize your processes.
3. Support your customers with digital file management
If HMRC has automatically enrolled your customers for MTD, there is a chance that they did not create digital records at the start of the tax year.
This means they may need to do the following:
- Import your bank transactions
- Enter your expenses
- Record all historical earnings
- Complete any overdue quarterly MTD updates.
The amount of work required here depends on how long the MTD preparation has been delayed.
4. Prepare for a surge in inquiries from customers
When HMRC contacts your customers, they are likely to turn to you first for assistance. With this in mind, you could prepare the following in advance:
- Standard customer communication on MTD
- FAQ documents about the MTD process
- MTD Webinars
- MTD onboarding checklists
- Recommendations on software to use
- Information about the support services your practice offers.
When you have this information, you can provide your customers with the support they need.
Creating reusable communications and checklists can help your practice process requests more consistently. Early involvement can also support service planning and customer understanding.
Final thoughts
Some of your clients may be feeling a little unsettled if they have received a letter from HMRC informing them that they are automatically registered with MTD for income tax.
But it offers your practice the ideal opportunity to support them with MTD. After all, the registration process is only the first step.
Your clients will still need to review and verify their information, choose MTD-compliant software, keep up with digital record keeping, and file their quarterly updates and tax returns. They will look to you for support and guidance through all of this.
Be proactive by identifying all potentially affected customers, verifying their software readiness, establishing support processes, and communicating with them regularly.
This will help create new opportunities for your practice and strengthen client relationships.
