Concerns raised over HMRC’s Making Tax Digital pilot

While HMRC’s new pilot to test Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) has been very much welcomed, some concerns have been raised.

MTD for ITSA is a new tax system that will require quarterly updates about self-employed income and property using software to keep digital records.

The new system was meant to be launched this year, however, this roll-out was delayed until April 2026. At the time, the government stated that self-employed professionals and landlords were already facing a ‘challenging economic environment’.

Now, with these new plans to test the MTD for ITSA, the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) have voiced concerns regarding the standards used to evaluate digital service.

They believe that their recently published seven ‘Principles of Tax Digitalisation’ should be ‘a benchmark against which digital tax services should be measured’.

According to the CIOT and ATT, a digitalised tax system should:

1. Enhance existing processes
2. Be cost and resource efficient
3. Be secure
4. Be integrated and adaptable
5. Accommodate agents
6. Be simple, tested and co-created
7. Accommodate accessibility requirements

Alison Kerrey, Chair of the Joint CIOT and ATT Digitalisation and Agent Services Committee, said, “HMRC should assess the MTD for ITSA pilot, and the ongoing implementation of the MTD programme, against these general principles for tax digitalisation, with check-points to ensure that these principles are being met.

“Failure to adhere to them could result in increased costs, poor implementation, unmet policy goals, and a significant loss of trust in the tax system.”

“Before signing up clients to the pilot, agents should carefully check they meet the eligibility requirements, and that they, their client and their software provider are ready to participate.”

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