Did you file in time? Did the Making Tax Digital earth move for you?

Aug 7
4 min read

Did you file in time? Did you make the first Making Tax Digital (MTD) deadline?

And was it easy, hard, exotic, or mundane?

If you were one of the 864,000 taxpayers it affects, this was a big day.

No official figures out yet from HMRC's Death Star, but it looks likely that up to half-a-million may have indeed missed the deadline.

Now, let's reserve judgment on this, but if over half of eligible taxpayers have decided not to bend the knee, then this doesn't say much for HMRC's awareness campaigns.

And okay, no fines at the moment for late filing, just a slapped wrist, but in future, each missed deadline could cost you two ton every quarter and an eventual visit from the boys.

I have no sympathy - I'm in the Spanish tax system which makes you pay and report every three months and it's no fun. Remember, these are the guys who invented the Spanish Inquisition - they still use the same tactics.

But, now seems a good chance to take a look at how

MTD is being received out there in the real world.

And in case you're tempted, please don't replace the M in MTD with an S, that is just childish. If you want to have a pop, just use the label coined by a bunch of MPs a while back: Making Tax Difficult. Hear, hear.

Now, the basics, just in case you've been asleep for the last 12 months.

All those sole traders earning over £50,000 a year now have to file a quarterly update. This covers income and expenses for the first three months of the tax year.

Under MTD, you still file a full tax return once a year, but you also send quarterly updates during the year.

HMRC stresses though that the quarterly updates are part of the new process, while the final tax return and payment deadline remains 31 January, after the tax year ends.

Also, and this has caused some confusion, the quarterly updates are just summaries of income and expenses to HMRC during the tax year. No tax payments are due resulting from the summaries.

So, who likes MTD?

Unsurprisingly, chief cheerleader is HMRC’s MTD director Craig Ogilvie who calls the shift a “landmark moment,” noting that for those already on software “this should be straightforward and take minutes.”

When someone tells you from the tax office that their wheeze of an idea is straightforward, then run for the hills.

And, this is odd. The official Government page on MTD helpfully includes a comment from sole trader Natasha Patterson who described her first MTD update as “so easy” and “logical – it wasn’t overwhelming.”

Ah, okay then, that will have calmed down the near million people sweating over this new initiative.

Thanks, Natasha.

For the sake of balance they arguably could have included a comment from sole trader Bill, who described MTD as a "xxxxxxx joke..." and which "...smart xxxx" thought this one up. But, I couldn't find such a quote.

Other supporters include the Tony Blair Institute which reports VAT-phase efficiencies: 26–40 hours saved on average and £185–195 million additional revenue in year one.

Er, I don't quite understand that, but well, Tony, he's a bright man, so I'm sure it makes sense.

And something called Numeric Accounting highlighted the digital benefits, including real-time insights, fewer errors and easier year-end prep.

There are plenty of naysayers.

FSB’s Paul Wilson warned that MTD risks “adding a lot of cost” for smaller firms, because, just at the moment with businesses being kicked from all sides, just what you need is more admin and cost.

Well done the UK Government, always there to make things easier.

Taxfix research came up with an interesting stat, revealing that 45% of UK sole traders are considering quitting self-employment amid rising admin pressure linked to MTD.

Not quite sure I believe that mind you, I wonder how many they questioned, maybe ten, but it is hard to believe that almost half are ready to throw in the towel.

Tax expert Andrew Oury argued that the change is a “one-off working-capital transfer… dressed up as helping people budget.”

Ooh, come off the fence Andrew. Amen to that though - I think he has a good point there.

And The NAO said HMRC has not shown MTD offers the best value for money. Such considerations have never stopped the Government before of course.

The Public Accounts Committee, the witty lot which I think originated the Making Tax Difficult jibe, cited “widespread and repeated failures” in planning, design, and delivery, with higher costs and delays.

And to finish, let's listen to Andrew Oury again, the chap quoted previously. In an opinion piece for LBC, he came out swinging, championing the plight of the poor sole trader and saying that MTD is an ill-judged and cruel piece of taxation.

This is what he said: "The official justification for all this digital machinery is error: small businesses supposedly get their sums wrong, costing billions. But hold that thought against what Parliament did in 2024, when it made the cash basis - money in, money out, no accruals, no stock counts, no year-end wizardry - the default way sole traders calculate their profits, precisely because their affairs are simple enough not to need an accountant's toolkit.

"You cannot declare in one breath that these businesses are simple enough to be taxed off their bank statements, and in the next that their errors are so dangerous they must file four times a year through commercial software. Both cannot be true."

This is cut from a large piece which is well worth a read. Click here.

Andrew has hit the nail on the head: MTD is all about Making Tax Difficult for sole traders.