Not signed up for MTD? HMRC could decide to do it for you

If you should already be using Making Tax Digital but haven’t signed up, waiting will soon stop being an option.

From September 2026, HMRC will begin signing up sole traders and landlords it believes should already be using MTD. It will do this in stages over the following months.

This doesn’t mean HMRC will handle MTD for you: it will put you into the system. You will still need suitable software, accurate digital records and any outstanding quarterly updates.

There is a big difference between being registered and being compliant.

Why is HMRC stepping in?

The first compulsory MTD quarterly update was due by 7th August 2026.

According to HMRC’s announcement, more than 570,000 taxpayers had signed up by 12th August and over 436,000 had submitted their first quarterly update.

That leaves a substantial number of people who may be required to use MTD but have either not signed up or not sent their first update.

Until now, taxpayers or their agents have been responsible for completing the separate MTD sign-up process. HMRC is now preparing to intervene where its records indicate that someone should already be in the system.

You can still sign up through GOV.UK before HMRC acts, or ask your accountant to do it for you.

HMRC signing you up will not make you compliant

Automatic sign-up may sound helpful. It does not solve the real problem.

HMRC will not:

• Choose suitable MTD-compatible software for you
• Reconstruct your digital records from the start of the tax year
• Check that every transaction has been recorded correctly
• Submit your overdue quarterly update
• Organise the process for your next deadline

You or your accountant will still need to handle these things.

HMRC says people who sign up themselves can check that their MTD details are correct from the start and prepare in their own time. Waiting for HMRC removes some of that control.

At the time of writing, HMRC says it will publish further guidance in late August explaining what to do if you receive a letter confirming that it has signed you up. ICAEW has also reported on the planned intervention.

Who is HMRC likely to sign up?

This action concerns the first group required to use MTD from 6 April 2026.

You should normally already be using MTD if all the following are true:

• You are an individual who is registered for Self Assessment
• You receive income from self-employment, property or both
• Your combined qualifying income from those sources was more than £50,000 in 2024/25
• An exemption does not apply

It’s important to note that the £50,000 test concerns gross income before expenses, not profit.

For example, a sole trader with £38,000 of turnover and £15,000 of gross rental income has qualifying income of £53,000. The two figures are combined, even though neither exceeds the threshold on its own.

Salary, pension income and dividends do not count towards the MTD qualifying-income threshold, although they may still need to be included in your tax return.

If you are unsure whether you were required to join, our guide explains what to do if you missed the first MTD deadline, including how the income test works.

Some taxpayers are automatically exempt, while others can apply for an exemption where using digital software would not be reasonable. HMRC’s exemption guidance explains the circumstances in more detail.

There is no penalty point this year – but the update is still due

HMRC will not issue penalty points for late quarterly updates during the 2026/27 tax year.

This gives people time to get used to the new system. It does not cancel the reporting requirement.

If your first quarterly update was due on 7th August, you still need to send it using compatible software. You must also keep digital records and prepare for the next update, which due by 7th November 2026.

Penalties can still apply if you file your end-of-year tax return late or pay your tax bill after the deadline. From 2027/28, the points-based penalty system will also begin applying to missed quarterly updates.

What should you do before HMRC signs you up?

If you think you should already be using MTD, take the following steps now:

1. Check your 2024/25 qualifying income and confirm whether you were required to join
2. Consider whether an exemption applies to your circumstances
3. Sign up for MTD or ask your accountant to complete the process
4. Check that all relevant self-employment and property income sources are included
5. Choose compatible software and bring your digital records up to date
6. Submit the outstanding quarterly information
7. Put a workable process in place before the 7th November deadline

This is particularly important if you have more than one business, combine self-employed and property income, own rental property jointly or have stopped receiving income from a source shown on your previous tax return. HMRC’s records may not tell the whole story.

Act before HMRC takes the first step

Receiving an HMRC letter does not have to become a crisis. But it is easier to sort out your registration, software and missing records before HMRC begins the process for you.

THP can check whether you are within the rules, complete the sign-up, recommend suitable software and help bring outstanding digital records and quarterly updates into order.

Find out how THP’s Making Tax Digital accountants can help.