In the last week, the Institute has responded to three technical consultations on draft legislation launched on L-day in July. Two of the consultations focus specifically on the behaviour of tax agents and fall under HMRC’s ‘Raising standards in the tax advice market’ project: ‘Enhancing HMRC’s powers and sanctions against tax adviser facilitated non-compliance’ and ‘Modernising and Mandating Tax Adviser Registration’. In both submissions, the Institute is recommending that the proposals therein are delayed until at least 1 April 2027. The Institute also responded to the consultation ‘Making Tax Digital for Income Tax and penalty reform’. Enhancing HMRC’s powers and sanctions against tax adviser facilitated non-compliance This consultation contains draft legislation to enhance HMRC’s powers against agents who facilitate non-compliance and includes the following measures which are currently scheduled to commence from 1 April 2026: Issuing file access notices to advisers suspected of facilitating non-compliance (the behaviour involved is reduced from dishonest conduct to deliberate behaviour), Significantly increased penalties where there is evidence of such behaviour, and Publication of details of advisers subject to any HMRC agent sanction. The key recommendations in the Institute’s submission are that implementation should be paused to commence no earlier than 1 April 2027 given our concerns about the lack of effective safeguards in the draft legislation. A range of new safeguards have therefore been proposed, in addition to citing the need for HMRC to revisit the highly disproportionate penalties in the draft legislation (which are currently based on the potential lost revenue to the Exchequer of the agent’s client). Modernising and Mandating Tax Adviser Registration This consultation examines the proposal that from 1 April 2026, subject to a three month transition period, all tax advisers who interact with HMRC on behalf of their clients must register with HMRC and will not be registered unless they meet ‘minimum standards’. The requirement to register will not initially apply to those who already have an Agent Services Account. Anyone who is not registered will be unable to represent their clients. Registration applications will require the name and address of the tax adviser and each ‘senior manager’ (essentially those at the highest level in the business, though not just those working in tax), together with confirmation that the eligibility conditions are met. To be eligible, the tax adviser and each senior manager must meet certain conditions including, inter alia, that they have no outstanding tax returns or payments and that they meet certain standards expected of tax advisers (which will be set and published by HMRC). There are also powers for HMRC to monitor eligibility and compliance with the rules on an ongoing basis and hefty sanctions for agents who fail to comply. The Institute made the following recommendations in its submission: Given concerns that the proposals are a form of quasi-regulation of members of Professional Bodies who are already subject to heavy regulation, registration should be delayed to no earlier than 1 April 2027 to allow for more in depth consultation, The definition of ‘senior manager’ should only apply to those who provide tax services, and, Further detailed consultation is required on the proposed sanctions in the draft legislation, given the link to the potential for the agent’s details to be published under the consultation on ‘Enhancing HMRC’s powers and sanctions against tax adviser facilitated non-compliance’. Making Tax Digital (MTD) for Income Tax and penalty reform This consultation legislates for the changes announced in March at the Spring Statement. In our submission, the Institute’s key ask remains that the Government monitors readiness and progress and listens to and acts on feedback from stakeholders. Although our main objective is to drive the MTD readiness of our members ahead of time, the Institute will continue to listen to and share members concerns as April 2026 approaches, and where appropriate, seek mitigations from this policy change. The Institute is flagging early that there is a high likelihood there will need to be some form of ‘soft landing’ for taxpayers, given the significance of this once in a generation change. HMRC should consider this and announce any soft landing, in particular it’s format, application, and parameters, as early as possible. The Institute raised concerns across a range of other areas including the ability of HMRC to cancel/ reset penalties/penalty points, exemptions, the calendar quarters election, and the definition of digital records. We also took the opportunity to raise concerns about the extension of MTD to those with qualifying income less than £30,000 from April 2028.

This week the first of two CPD webinars, which will look at Making Tax Digital (MTD) for income tax from different angles, will take place. More details on each are available below. Once again, we encourage members with clients affected to book onto both of these webinars. HMRC has also recently launched a new software choices page. CPD webinars Tim Palmer’s two hour CPD webinar takes place later this week on Thursday 11 September and is still open for booking. This webinar will deal with the detail of the technical rules and practicalities of MTD. Planning opportunities will also be considered. Next week at 1pm on Tuesday 16 September, HMRC are delivering a 1 hour webinar which will mainly focus on key readiness tips for agents and taxpayers. Spaces are still available to book. The detailed agenda for Tim Palmer’s webinar is as follows: The requirements of MTD for income tax, Which self-employed individuals and landlords will be mandated to comply, The turnover test, Digital record-keeping, The submission of quarterly updates, including what must be submitted, The election to use calendar quarters instead of fiscal quarters, Traders with turnover below the VAT threshold, The submission of the final declaration, Planning opportunities, The software decision, Practical case studies, The transitional rule, Pre-populated income, The impact on the construction industry, and A general overview of MTD for income tax. The HMRC led webinar on 16 September will be delivered by Sam Wood BSc ACA. Sam works with agents within HMRC’s MTD programme and has a background in accounting and digital transformation. Sam is responsible for Cross Cutting Stakeholder Engagement, Policy and Strategy at HMRC and is a Chartered Accountant and a member of ICAEW with wide experience of MTD from its inception. Software choices page The software decision is a vital one for both agents and taxpayers affected by MTD for income tax. In recognition of this, HMRC has been working in recent months to enhance the support available to users selecting MTD for income tax compatible software. A new and improved software choices tool (which HMRC refers to as a ‘MVP’ (Minimum Viable Product)) was launched over the summer to help users find the right product for their needs. This new tool builds on the existing software choices guidance page, which has also been significantly updated. According to HMRC, it reflects extensive user research and close collaboration with external delivery partners and stakeholders, to ensure it is shaped by real user needs and experiences. Importantly, it is designed to be intuitive and accessible and should be of assistance in helping all taxpayers (including those without an appointed agent) navigate their options. However, HMRC is reminding users that this is an early iteration of the tool. The aim overall is to empower more users to take the next step in their MTD journey independently.

This month, two Institute CPD events are taking place, each of which will look at Making Tax Digital (MTD) for income tax from different angles. More details on each are available below. As we approach the six months to go mark to the first tranche of mandation from 6 April 2026 for sole traders and landlords with gross income in excess of £50,000, the Institute recommends that members with clients affected book onto both of these webinars. HMRC has recently launched a new agent outreach campaign which allows agents to complete an online form to register to receive support directly from HMRC ahead of April 2026. CPD webinars Tim Palmer’s two hour CPD webinar on Thursday 11 September is open for booking and will deal with the detail of the technical rules and practicalities of MTD. Planning opportunities will also be considered. The following week at 1pm on Tuesday 16 September, HMRC are delivering a 1 hour webinar which will mainly focus on key readiness tips for agents and taxpayers. Spaces are still available to book. The detailed agenda for Tim Palmer’s webinar is as follows: The requirements of MTD for income tax, Which self-employed individuals and landlords will be mandated to comply, The turnover test, Digital record-keeping, The submission of quarterly updates, including what must be submitted, The election to use calendar quarters instead of fiscal quarters, Traders with turnover below the VAT threshold, The submission of the final declaration, Planning opportunities, The software decision, Practical case studies, The transitional rule, Pre-populated income, The impact on the construction industry, and A general overview of MTD for income tax. The HMRC led webinar on 16 September will be delivered by Sam Wood BSc ACA. Sam works with agents within HMRC’s MTD programme and has a background in accounting and digital transformation. Sam is responsible for Cross Cutting Stakeholder Engagement, Policy and Strategy at HMRC and is a Chartered Accountant and a member of ICAEW with wide experience of MTD from its inception. HMRC agent outreach support campaign for agents launched According to the latest data from HMRC, approximately 864,000 taxpayers will be mandated to use MTD for income tax from April 2026. Almost 1,100,000 (£30,000 - £50,000 population) will be mandated from April 2027 and this will be followed by circa. 975,000 (£20,000 - £30,000) from April 2028. In recognition of the scale of this change for taxpayers and agents, HMRC has recently launched a new agent outreach campaign.  This campaign allows agents to register with HMRC for direct and tailored support by completing an online form. Agents who have an Agent Services Account (ASA) can access the form by signing in with the Government Gateway ID and password linked to their ASA. If the agent does not have an ASA, the form can be completed by signing in with their online services for agents account details (which will require contact details to be provided manually). When completing the form, the agent will be asked to:  allow HMRC to make contact them by email; indicate how many clients they must sign up to MTD for income tax and any that are willing to sign up voluntarily for testing, and    express an interest in having a one to one conversation with HMRC about readiness for and testing of MTD for income tax.   HMRC then aims to review the agent’s form and tailor its response, and the support provided, depending on the agent’s specific needs. Priority is being given to agents with a large number of clients who will be required to sign up. HMRC is aiming to offer a wide range of supports which will include information emails, virtual peer group sessions and, if appropriate, a direct support discussion with HMRC’s MTD team. This is a very valuable tool for agents with clients affected by this significant change hence we encourage you to consider availing of this key support ahead of time.