HM Revenue and Customs (HMRC) is under fire for offering insufficient support to those soon to be affected by the Making Tax Digital (MTD) initiative.
Starting in April 2026, the MTD for Income Tax Self-Assessment (ITSA) will become compulsory for self-employed individuals and landlords across the UK who earn over £50,000 per year.
This upcoming change will require affected individuals to maintain digital records and use HMRC-approved software to submit quarterly reports on income and expenses. This system replaces the current practice of submitting a single annual tax return.
Despite the new approach, a final end-of-year declaration will still be due by 31 January following the close of the tax year.
The introduction of this system is expected to result in additional costs for many businesses, as they will need to invest in suitable software. Furthermore, administrative burdens could increase, particularly for those needing assistance from accountants to remain compliant.
There will also be a new penalties framework introduced. Missing any of the required quarterly submissions could lead to fines and interest charges, adding pressure to stay up-to-date throughout the year.
A recent analysis by financial firm RIFT suggests that many people feel underprepared and unsupported by HMRC in the lead-up to the deadline.
The firm’s research highlighted a significant rise in online search activity from individuals trying to understand how to comply with the MTD requirements.
Specifically, during the third quarter of last year, there was an average of 8,760 monthly Google searches for the term ‘Making Tax Digital’, indicating widespread concern and confusion among those impacted.
This surge suggests a growing demand for clearer guidance and more hands-on assistance from HMRC, particularly as the deadline draws nearer.
Landlords and the self-employed are among those most likely to be affected by the change, and many have voiced frustration over the lack of accessible resources and advice.
Critics argue that HMRC must step up its communication and support if it wants businesses to successfully transition to the new system without disruption.
As it stands, concerns remain that without better guidance, many could struggle with compliance and be hit with unnecessary penalties.
With less than a year left to prepare, the pressure is on HMRC to bridge the information gap and help taxpayers understand what’s required.
Search interest in ‘Making Tax Digital’ has surged significantly in recent months, reflecting growing concern among taxpayers. In the final quarter of last year, monthly searches remained steady at around 8,386. However, this jumped to an average of 19,819 searches per month during the first three months of this year, peaking at 34,017 searches in March alone.
The upward trend has continued into the second quarter. In April and May, average monthly searches have soared again, reaching approximately 43,648, indicating that interest and confusion around the new system remain high.
Additional research by RIFT has linked this spike in online queries to mounting difficulties in contacting HM Revenue and Customs directly. The analysis shows a notable decline in HMRC’s call-handling performance during this crucial time.
In January this year, HMRC managed to answer just 82.3% of all incoming calls, down from a more promising 90.2% in October 2024. The response rate declined further in February, dropping to only 80.9%—the lowest figure seen over the past six months.
Alongside falling response rates, the number of calls left unanswered has also grown sharply. In October last year, 245,952 calls went unhandled, decreasing slightly to 213,747 by December. However, in January this year alone, that number rose dramatically to 599,057, with another 516,629 calls missed in February.
The speed at which calls are being answered has worsened too. The average wait time jumped from 10 minutes and 40 seconds in October 2024 to over 21 minutes by February this year.
A spokesperson for RIFT commented on the findings, stating: “HMRC simply isn’t equipped to facilitate the surge in demand for its guidance and advice ahead of such a notable change. It’s clear that many are having to seek their own answers via the internet.”
These growing issues raise concerns about the level of support available for those expected to comply with Making Tax Digital by next year, especially as the deadline draws nearer.
As more people turn to online sources for help, it becomes increasingly evident that HMRC may need to bolster its customer service and communication strategies.
The shift to digital tax reporting represents a major transition, and ensuring that individuals and businesses understand their obligations is vital to avoiding penalties and delays.
Without clearer communication and faster response times, the pressure on taxpayers will only increase, potentially leading to further confusion and frustration.
As the implementation date approaches, the spotlight remains firmly on HMRC’s ability to provide timely and effective support to those who need it most.