Introducing a regular roundup of all the essential tax news for bookkeepers. ICB Members can obtain further clarification via the member helpline.
First MTD quarterly update deadline has passed
More than 864,000 sole traders and landlords were required to send their first Making Tax Digital for Income Tax quarterly update to HMRC by Friday 7 August 2026, marking the first live test of the new regime.
MTD for Income Tax became mandatory from 6 April 2026 for sole traders and landlords with qualifying income from self-employment and property above £50,000 on their 2024/25 tax return. The first quarterly update covered 6 April to 5 July 2026 for most taxpayers, or 1 April to 30 June for those who had elected calendar update periods. The deadline for both was 7 August.
The update is generated by MTD-compatible software from the client's digital records and sends totals for each income and expense category to HMRC. It is not a tax return, so no accounting or tax adjustments are needed at this stage. The Self-Assessment return and 31 January payment deadline remain in place.
A separate update is required for each self-employment and each property business, even where there has been no activity during the quarter.
What happens if a quarterly update was late?
HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year. The obligation to keep digital records and submit quarterly updates still applies, however, and the updates must be completed before the annual tax return can be submitted.
Penalties continue to apply to late tax returns and late payments. HMRC plans to write to taxpayers who missed the 7 August deadline from October.
Any tax estimate shown after submission is provisional. It may not reflect all income sources or reliefs and will be replaced by the final calculation when the annual return is completed.
The first deadline has now passed, making it a useful point to review what worked and prepare clients for the next quarterly update.
Run a client-by-client check to make sure digital records are complete, software is connected, agent authorisation is in place and a separate update has been submitted for every business and property source.
Keep a record of each submission and any issues identified. Where errors or missing information have been found, make sure these are addressed ahead of the next quarterly update.
It is also worth reminding clients that the in-year tax estimate is provisional and that their annual tax return and payment are still due by 31 January.
First tax adviser registration window closes 18 August
The first phase of HMRC's mandatory tax adviser registration closes on 18 August 2026. This deadline applies to new tax advisers and advisers interacting with HMRC without an Agent Services Account, Self Assessment agent account or Corporation Tax agent account. Other advisers enter the registration process later according to their existing HMRC accounts and the services they provide.
Under the Finance Act 2026, businesses that interact with HMRC about other people's tax affairs must register as tax advisers through the new Modernising and Mandating Tax Adviser Registration (MMTAR) system, which opened on 18 May 2026. Registration is being phased according to your existing HMRC footprint.
The 18 August deadline applies to new tax advisers and those interacting with HMRC without an Agent Services Account, Self Assessment agent account or Corporation Tax agent account. Advisers with a Self Assessment or Corporation Tax agent account, but no Agent Services Account, must register between 18 August and 18 November 2026. Advisers who provide only payroll services and do not have an Agent Services Account must register between 18 November 2026 and 18 February 2027. Financial services organisations enter the registration process from 31 December 2026.
If you already have an Agent Services Account, you do not need to register again at this stage. HMRC will contact you through your account when it needs further information, so make sure your contact details there are current.
Registration is free, and HMRC has confirmed advisers can continue acting for clients while an application is being considered. An interactive tool on GOV.UK helps you check if and when your firm must register.
If you are paid to file returns, make claims, submit documents or communicate with HMRC for clients, you are likely to fall within the registration rules, although your registration window depends on the HMRC accounts your practice already holds. Use HMRC's checking tool this week to confirm your registration date, and do not assume you are covered — verify which legal entity holds your agent accounts and who your authorised users are. Failing to register on time could ultimately disrupt your ability to act for clients, so treat this as a practice-critical deadline, not admin.
VAT changes demand action on systems and coding
The temporary 5% VAT rate on children's meals and family attractions ends on 1 September, and Capital Goods Scheme changes are already in force. Client systems need attention on both fronts.
Since 25 June 2026, a temporary 5% rate has applied to qualifying children's meals eaten on the premises, children's admission to theatres, cinemas, concerts, exhibitions and shows, and all qualifying admission tickets to specified attractions suitable for families with children, such as theme parks, zoos and soft play centres. The relief ends on 1 September inclusive, and standard rating resumes from 2 September. The scope is narrow: children's meals qualify only if marketed, priced and presented specifically for children, takeaway is excluded, and season or repeat-entry passes extending beyond the relief period do not qualify unless priced the same as a standard single-entry ticket.
The transition back is where errors happen. Tax point rules mean deposits, advance bookings and refunds spanning 1 September can fall on either side of the change, and businesses using the Flat Rate Scheme or Tour Operators' Margin Scheme need particular care. Revenue and Customs Brief 5 (2026) sets out HMRC's guidance on the relief, with the normal tax point rules determining which rate applies to payments spanning the change.
Separately, from 29 July 2026 the Capital Goods Scheme was simplified: computers and computer equipment are removed from the scheme entirely, and the threshold for land, buildings and civil engineering works rises from £250,000 to £600,000 (excluding VAT). The new rules apply only where no capital expenditure on the asset was incurred before 29 July 2026. Assets with expenditure incurred before that date remain under the previous rules, and existing adjustment periods must continue to be tracked.
For hospitality and leisure clients, plan the switch-back now: document which supplies used the 5% code and why, check tax points on deposits and advance sales spanning the change, restore standard-rate coding from 2 September and reconcile VAT reports either side of the date. On the Capital Goods Scheme, review the fixed asset register — flag assets already in an adjustment period, which remain in the scheme, and note that new property expenditure below £600,000 no longer needs CGS tracking.
Three HMRC consultations raise compliance stakes
A proposed criminal offence for reckless tax statements, mandatory Direct Debit for VAT and PAYE, and automated recovery of small tax debts all signal a tougher enforcement landscape ahead.
Three consultations from the government's Tax Update 2026 package close this month, and together they point to a system where filing, payment and enforcement are far more tightly connected.
The most significant proposes a new criminal offence for making reckless untrue statements or declarations in relation to direct taxes, mirroring offences that already exist for VAT and customs. It would give prosecutors an alternative charge where dishonesty cannot be proven but recklessness can, with sanctions of an unlimited fine and up to two years' imprisonment. Crucially, the consultation confirms the offence would apply to any agent who recklessly makes a statement to HMRC on a client's behalf. HMRC says innocent mistakes and failures to take reasonable care will remain matters for civil penalties. The consultation closes on 16 August 2026.
A second consultation, also closing 16 August, proposes requiring most VAT and PAYE return liabilities to be paid by Direct Debit — only around 330,000 of 2.73 million registered businesses currently do so.
The third, closing on 28 August, would allow HMRC to recover persistent lower-value debts through affordable monthly deductions from bank and building society accounts after advance notice and a final opportunity to pay or agree another arrangement. The consultation is aimed principally at debts of up to £5,000 for individuals and £10,000 for businesses, subject to the final policy design.
The reckless-statement proposal directly affects professional working practices. Files should record the enquiries made, assumptions tested, inconsistencies investigated and client approval obtained before a submission is made. Reliance on a client statement may provide insufficient protection where the adviser was aware of a material risk that the information was untrue and proceeded without resolving that risk. Review engagement letters so that responsibility for preparing, approving, submitting and paying each liability is clear, and consider contributing evidence to ICB's consultation responses before the August deadlines.
HMRC sends 1.8 million Simple Assessment letters
HMRC is issuing around 1.8 million Simple Assessment (PA302) letters for 2025/26, with pensioners' letters starting from 12 August. Most amounts are due by 31 January 2027.
Simple Assessment letters are sent to people who owe Income Tax that cannot be collected automatically through PAYE and who have not been required to complete a Self Assessment return for the year. Common triggers include untaxed savings interest, tax due on the State Pension, income from multiple pensions or employments, and liabilities of £3,000 or more that cannot be coded out.
Working-age taxpayers began receiving letters from the end of June. Pensioner letters begin from 12 August, and a further batch will follow later in the year once HMRC has processed bank and building society interest data. Recipients do not need to complete a tax return solely because they have received a Simple Assessment letter. The PA302 sets out HMRC's calculation, the income figures used and the amount due.
The calculations are generated automatically from data supplied by employers, the Department for Work and Pensions and financial institutions. That data is not infallible — duplicated employments, incorrect interest figures or missing allowances can all flow straight into the assessment. Anyone who believes the calculation is wrong should contact HMRC within 60 days of the PA302 issue date and explain which figures they dispute and why. If HMRC issues a decision following that query and the taxpayer still disagrees, the formal appeal period is normally 30 days from the decision letter.
Unless the letter states a different date, payment is due by 31 January 2027. Where HMRC issues an assessment after 31 October 2026, the letter will show a later due date of three months from the date of issue.
Expect calls from clients — particularly pensioners — who have never dealt with HMRC directly before. Check each letter against the client's own records: bank interest certificates, P60s, pension statements and dividend vouchers. Confirm the income has not already been reported elsewhere, and where the calculation is wrong, help the client challenge it within the 60-day window. Add a diary note for the payment deadline and discuss affordability early if the bill is unexpected.