HMRC chief admits end of year MTD filing ‘going to be a test’

Jacob Grattage, Reporter, Business & Accountancy Daily. Croner.

Policy chief at HMRC Jonathan Athow describes ‘deliberately created’ flexible filing model for Making Tax Digital but acknowledges end of year filing could be challenging.

HMRC has sought to reassure taxpayers over gaps in year-end filing functionality ahead of the extension of Making Tax Digital (MTD) to more than one million taxpayers with qualifying income over £30,000 from 6 April 2027. HMRC recently froze all new software provider accreditation and is reviewing the current process to make sure agents and the public have access to the approved software options.

Questioned at the Digital Accounting Show in London, HMRC director general for strategy and policy Jonathan Athow (pictured) said the tax authority had built flexibility into MTD, allowing taxpayers to use different software throughout the process.

Athow told Business & Accountancy Daily: ‘We’ve been quite flexible in how we’ve set up the software. You can use multiple products; you can use a different product for your in year, and end of year. We are creating a lot of functionality there.

‘We do want to see a good suite of products for that end of year. So far, we’re seeing good improvements, we continue to liaise with industry, and we want more products that do allow people to complete in year,’ Athow said.

However, he warned: ‘But again, we also don’t want to be too prescriptive. We know with some products, some agents want to have different products for different purposes. We deliberately created a very flexible model, but that end of year journey is going to be a test.

‘We do want a good variety of products, and a good variety of products that give you end of year functionality’.

The end of year filing issue has been a big talking point for accountants, with some key software providers not yet geared up to deal with the critical final update. This created problems for people in the beta testing for MTD for Income Tax, who were trialling the system during the last tax year.

Amidst widespread concern about the extension of MTD to the £30,000 cohort, HMRC’s session on the roadmap at the show focused primarily on the importance of digitalisation.

In a speech on HMRC’s transformation roadmap, Athow said: ‘We see software as a really important part of this tax ecosystem, that is going to be a key way in which people interact with HMRC.’

‘Our vision here is a thriving tax software market that helps support tax compliance. We are thinking a lot at the moment about how we can do more to support people to make good software choices, and we support the industry to build the right products’.

Athow stressed: ‘We’re not planning to regulate software, but we do want to think about how we can shape and develop that market.’

A slide presented during Athow’s session stated that end-of-year filing could be completed using ‘not necessarily the same’ software used for quarterly updates, with a footnote adding: ‘People will be able to use multiple products if they need/want to such as one product for quarterly updates, different one for end of year.’