HMRC starts signing up MTD no-shows: what bookkeepers and accountants should do now
At a glance
Article summary
From September 2026, HMRC will start automatically signing up sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not joined. IAB explains that HMRC completing sign-up does not equal MTD readiness: practices should review affected clients now, check HMRC's information against current circumstances, and use the coming weeks to get ahead of the 7 November quarterly deadline rather than wait for a letter to arrive.
The IAB has reviewed HMRC’s latest announcement and updated guidance. For bookkeepers and accountants, the key message is clear: HMRC stepping in does not remove the need for action. Practices should review affected clients now, rather than waiting for an HMRC letter to arrive.
What you need to know
Making Tax Digital for Income Tax became mandatory from 6 April 2026 for eligible sole traders and landlords with qualifying income over £50,000, based on their 2024 to 2025 tax return. More than 570,000 people have signed up and over 436,000 have successfully submitted their first quarterly update.
However, a significant number of taxpayers who should already be within MTD have yet to sign up. From September, HMRC will begin addressing that gap directly by signing up those it believes should already be using MTD.
Agents can still sign clients up themselves. We believe practices should use this opportunity to check their client lists, confirm who is genuinely in scope and resolve outdated information before HMRC acts.
What is HMRC changing from September 2026?
HMRC will begin automatically signing up people who need to use MTD for Income Tax for the 2026 to 2027 tax year but have not signed themselves up or been signed up by an agent.
The process will take place in stages over the coming months. HMRC expects to sign up thousands of customers each day, with the programme pausing during the Self-Assessment peak.
HMRC is using information it already holds, including qualifying income reported through the 2024 to 2025 tax return, to identify those who should be using MTD.
This is significant because HMRC’s intervention is not simply a reminder to register. HMRC will complete the initial sign-up itself.
The taxpayer still has work to do afterwards.
Once HMRC has signed someone up, it will write to them explaining what has happened and what they need to do next. Depending on their communication preferences, this may arrive by post or through their HMRC online services account.
Where a taxpayer has an agent, HMRC will ask them to share the communication with that agent. HMRC will not send the agent a separate copy, although the customer letter will also be available through HMRC’s agent toolkit.
The taxpayer or their agent must then access HMRC online services, review the information used during sign-up and take the necessary steps to confirm or update it. Agents can complete the relevant actions through their agent services account where they have the appropriate authorisation.
Why practices should act before HMRC does
HMRC’s existing customer and agent sign-up routes remain open while the automatic process takes place.
That means practices should not assume HMRC’s intervention removes the need to review unsigned clients. There is still an opportunity to identify affected clients and complete the sign-up before HMRC does.
When an agent manages the process, they can check that the client’s income sources and circumstances are correct from the outset. HMRC’s automatic process relies on information already held from previous tax returns, which may not reflect more recent changes.
A client may have stopped trading, started another business, changed their property interests or experienced another change affecting the information HMRC holds.
The priority should therefore be clients who:
- should be within MTD but have not yet signed up;
- may no longer fall within the requirements because their circumstances have changed;
- believe they qualify for an exemption;
- have registered but are not yet maintaining appropriate digital records or submitting updates; or
- need their agent authorisation or HMRC information checked.
The important point is that HMRC is working from the information available to it. A bookkeeper or accountant may have a much more current understanding of the client’s position.
The IAB’s view: registration does not mean MTD readiness
HMRC’s intervention should help address the remaining registration gap, but the important issue for the profession is not simply who completes the sign-up.
It is whether each client is correctly identified, properly set up and able to meet their ongoing obligations.
The latest figures reinforce that distinction. More than 570,000 people had signed up for MTD for Income Tax when HMRC published its latest figures, while 436,000 had successfully submitted their first quarterly update.
For practices, registration should therefore not be the only measure of MTD readiness.
The more useful question is whether each affected client has appropriate digital records, compatible software and a reliable process for meeting their quarterly and annual obligations.
We recommend using HMRC’s September activity as a trigger for a structured client review. Establish whether each potentially affected client is required to use MTD, whether they have already signed up and whether HMRC’s information reflects their current circumstances.
The technical act of registration can be automated. Understanding a client’s records, circumstances and responsibilities cannot.
Which clients should be reviewed first?
A focused review can help practices prioritise their workload.
| Client group | Action to consider |
|---|---|
| Required to use MTD but not signed up | Confirm eligibility and sign them up before HMRC does where appropriate. |
| HMRC has already signed them up | Check HMRC’s records and confirm or update the relevant income sources. |
| Circumstances have changed | Check whether HMRC’s information remains accurate and update it where required. |
| Client believes they are exempt | Check the exemption rules and ensure their position has been properly established with HMRC. |
| Signed up but behind with MTD | Check digital records, compatible software and outstanding quarterly updates. |
| Agent authorisation incomplete | Check the client’s authorisation appears correctly within the agent services account. |
For agents, existing Self Assessment authorisations can be recognised for MTD for Income Tax, but they need to appear within the agent services account. Adding an authorisation does not automatically sign the client up. Each client still needs to be signed up individually.
Registration is not the finish line
For clients already within the regime, the focus now needs to move from registration to effective delivery.
MTD requires affected taxpayers to use compatible software, create and maintain digital records, and send quarterly updates for their self-employment and property businesses.
The first quarterly update deadline was 7 August 2026. The next is 7 November 2026, followed by 7 February 2027 and 7 May 2027.
Clients automatically signed up by HMRC may therefore already have an overdue first update. They should catch up on their digital records from the start of the tax year and submit any overdue quarterly updates as soon as possible.
This gives practices a useful window to identify clients who are technically registered but are not yet fully operational under MTD.
What about MTD penalties in 2026 to 2027?
HMRC will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. However, that does not remove the requirement to submit them.
Quarterly updates still need to be completed before the taxpayer can submit their tax return. Penalties can also still apply to late tax returns and late tax payments.
We would therefore caution against treating the first-year easement as additional time to delay implementation.
Practices should instead use this period to establish reliable processes, resolve problems and help clients become accustomed to maintaining their records digitally before the penalty regime for quarterly updates takes effect.
Making Tax Digital for Income Tax
Frequently asked questions
Preparing practices for the next MTD deadline
HMRC’s move to automatically sign up taxpayers should narrow the registration gap, but it does not solve the wider implementation challenge for practices or clients.
Bookkeepers and accountants now have a clear opportunity to review their client lists before the next quarterly deadline on 7 November.
Check who should be within MTD, who has already been signed up, whether HMRC’s information is accurate and whether each affected client has compatible software and workable digital record-keeping processes.
The next stages of MTD are also approaching. The qualifying income threshold reduces to more than £30,000 from 6 April 2027 and more than £20,000 from 6 April 2028.
For practices, the work being done now should therefore form part of a longer-term approach to MTD.
Good client data, clear responsibilities and effective digital processes will become increasingly important as more taxpayers enter the regime.
