Making Tax Digital (MTD) was meant to be the driving force behind HMRC’s digital future – a bold plan to bring tax reporting into the 21st century. First unveiled in 2015, it has remained a fixture on business agendas ever since. But nearly a decade later, the reality looks very different.
A string of delays – triggered by the pandemic followed by the decision to give businesses more breathing room to implement it – seems to have left the MTD roadmap fragmented and uncertain, and given some firms an excuse to delay taking action.
A stark divergence in views has emerged over the years. On one side are the forward-thinking businesses, digitally fluent, already running MTD-compliant systems, and largely unaffected by shifting timelines. These are the companies that understood the long-term direction of travel and chose to act early, not because they had to, but because they saw the value in doing so.
On the other side sit those counting on HMRC to kick the can even further down the road. It’s a risky bet, and one that is looking increasingly unlikely to pay off.
Businesses waiting for yet another deferral may be caught out
HMRC has not helped its MTD case at times. Its communications have sometimes been unclear and inconsistent, and necessary clarifications have been slow to arrive.
The repeated delays and extensions have disrupted planning and knocked confidence. Some teams have had to revisit internal workflows, update training programmes, renegotiate vendor relationships, and in some cases, delay client rollout strategies. For some, the delays have bred apathy; for others, they have created operational bottlenecks and client uncertainty.
After making several public concessions on rollout dates, HMRC is unlikely to make many more. Businesses waiting for yet another deferral may find themselves caught out when the next phase lands.
Tech advantage
MTD is just one part of a wider shift toward real-time reporting, automation and connected systems. Further delays will not slow down that trend – they will only make it harder for the late adopters to catch up.
The longer businesses delay implementation, the more costly the transition becomes
In any case, the value of digital upgrades is that they will do more than just satisfy MTD requirements – they will also help unlock wider benefits such as real-time reporting, automated bank feeds, improved forecasting and stronger financial oversight. The focus is moving from compliance to performance. The businesses that embrace digital early will find it much easier to adapt to future regulations and client demands.
There are also financial implications in foot-dragging. The longer that businesses delay implementing MTD-compliant systems, the more costly the eventual transition becomes. Replacing legacy tools, retraining teams under pressure and fixing problems at the last minute all add up – and often result in a higher price than if those changes had been planned and phased in over time.
Training needs
Any organisation that has not already carried out a thorough assessment of its current digital capability should do so now. This means checking whether records are being maintained in a digital format, evaluating whether existing accounting systems are MTD-compliant and identifying gaps in internal processes.
Training plays a massive role in successful adoption, especially for smaller organisations or owner-managed businesses. Everyone handling financial data, from the accounting teams to the finance director, needs to understand the new processes and expectations that come with switching to a fully digital system.
The value of digital does not start or stop with MTD
Most organisations already have some level of detailed digital understanding or capability, so moving from spreadsheets to cloud-based platforms, automating expense reporting and introducing quarterly tax updates as standard practice may not be such a stretch. However, some smaller businesses may struggle – accountants can offer their owners the necessary clarity and confidence (although HMRC needs to provide this too).
The best in our space think of MTD not as digital disruption but digital opportunity. The value of digital does not start or stop with MTD. This is about more than just meeting a government mandate. It is about building a resilient, data-driven business that can respond quickly in a fast-moving environment. The firms that act now won’t just survive MTD – they will thrive and emerge stronger, smarter and better equipped for the future.
