‘We are not expecting perfection’, HMRC issues update on MTD cohort

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

With half a million still yet to sign up for MTD for Income Tax, HMRC tells Accountex crowd ‘it is all about good enough’.

As mandatory quarterly reporting under Making Tax Digital (MTD) kicked in from April for taxpayers with non-PAYE qualifying income over the £50,000 threshold, only 303,000 have signed up for the new system, revealed Jonathan Hawkes, deputy director of MTD.

At Accountex London 2026 Hawkes said: ‘We have had 303,000 sign-ups to MTD for income tax, which is a really strong positive start.’

In August last year, HMRC stated: ‘There are 864,000 individuals with a qualifying income over £50,000.’ As 303,000 have now signed up, that still leaves 65% of the £50,000 cohort yet to register.

At Accountex, Hawkes took time to ‘myth bust’, stating: ‘There is a lot you will have heard about “five tax returns”, they are not tax returns. There is only one tax return, MTD does not change the number of tax returns.

‘Those quarterly updates are simple pointing time assessments of a customer’s income and expenses, you don’t need to make any adjustments… they are there as a simple check, and you can go back and details in future quarterly updates.’

Hawkes continued: ‘If you miss something, or if your clients miss something, you can add them in future quarters.

‘It is all about good enough and getting those in a good enough state so that we are keeping those digital records. We are not expecting perfection.’

On the amount of individuals signed up for MTD for income tax, Hawkes said: ‘Clearly there is more than we want to see, I am not going to say we need to rest on our laurels now we want to see more signups.’

‘A lot of customers will leave it to that first quarterly update to sign up, so we are expecting that to happen… That is something that we are seeing in our trajectories,’ Hawkes said.

On HMRC’s new penalty regime, Hawkes said: ‘Alongside MTD there will be a point-based system and that is designed to be fairer and more proportionate.’

He continued: ‘Under that scheme customers who make the occasional slip will just get a penalty point. Only when you get four penalty points will you receive a financial penalty.

‘The idea is that we are not penalising customers who make occasional slip ups, but we will still penalise those customers that make repeated late filings.’

Hawkes admitted: ‘We know it is a big change, so we have been introducing this on a phased rollout basis, I want to thank anyone who has brought customers into our beta testing phase over the last two years.

‘Last year we tested with 6,000 customers, we’ve had thousands of quarterly updates to prove the service works for customers… crucially that has let us improve the service, we are continuously iterating and learning and tweaking the service based on feedback from customers.’

Pictured: Jonathan Hawkes, HMRC deputy director of MTD, talking at Accountex London 2026