The countdown has begun. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is no longer a distant government project—it’s a reality landing in April 2026. For CPAs, ACCAs, and accounting firms, the spotlight is firmly on software compatibility and digital record keeping.

This isn’t just another compliance deadline. It’s a chance to transform how you work with clients, streamline processes, and future-proof your firm. But it’s also the area that will trip up the most accountants if they don’t act early.

Why Software Compatibility Matters More Than Ever

Under MTD, manual spreadsheets and paper records are relics of the past. HMRC requires all businesses and landlords with income above £50,000 (from April 2026) to use MTD-compatible software to keep and submit their records.

That means:

  • No more copying and pasting between spreadsheets.

  • No “workarounds” for VAT and income submissions.

  • No tolerance for software that can’t directly communicate with HMRC’s digital system.

The goal? Seamless digital links from client transactions → software → HMRC.

If your software isn’t compatible, your clients will be non-compliant. And that non-compliance falls squarely back on you as their trusted advisor.

What Exactly Counts as Digital Record Keeping?

Here’s where the details matter—and where CPAs will win or lose the trust of clients. Digital record keeping under MTD requires:

  • Real-time entry of income and expenses (no waiting until year-end).

  • Direct digital links—data cannot be manually re-typed at any stage.

  • Quarterly submissions of client records via approved software.

  • End-of-period statements (EOPS) that reconcile annual accounts with HMRC.

Think of it as audit-ready bookkeeping, every quarter, every client.

The Bridging Software Debate

Accountants are already buzzing about bridging software—tools that connect existing spreadsheets to HMRC. While tempting, this is a short-term sticking plaster.

Why?

  • It adds another step (and another risk of error).

  • It doesn’t solve the issue of real-time digital record keeping.

  • HMRC has been clear: bridging is acceptable only if the digital link is unbroken—but most firms end up falling into compliance grey areas.

Smart firms are already moving clients to fully MTD-compatible software packages—because the transition is inevitable.

Key Features to Look For in MTD-Compatible Software

If you want to future-proof your practice, your software should include:

  • Direct HMRC API integration (no manual uploads).

  • Client-friendly interfaces for small business owners and landlords.

  • Automated bank feeds and expense capture.

  • Quarterly reporting dashboards that flag errors early.

  • Scalability—one platform to manage VAT, ITSA, and eventually Corporation Tax under MTD.

This isn’t just about ticking HMRC’s boxes. It’s about building efficiency and reducing the compliance grind.

Why This Is the Moment to Educate Clients

Here’s the reality: most small businesses and landlords are still in the dark. They don’t know the April 2026 deadline, and they don’t understand why their Excel sheet won’t cut it.

That’s where CPAs and ACCAs can shine:

  • Run webinars and workshops on digital record keeping.

  • Offer client readiness audits—reviewing whether their current system will work under MTD.

  • Provide tiered software solutions so clients can choose what suits them best.

Firms that wait until 2026 will drown in panicked clients. Firms that educate now will own the conversation.

The Compliance Risk if You Delay

Non-compliance penalties under MTD are no longer theoretical. HMRC is rolling out a points-based penalty system for late submissions and non-digital records. That means:

  • Accidental errors still count.

  • Repeated mistakes trigger escalating penalties.

  • Clients will expect you to shoulder the blame if their software setup fails.

Your reputation depends on proactive action—waiting until 2026 is not an option.

Turning Compliance Into a Growth Opportunity

Here’s the silver lining: MTD isn’t just red tape. It’s an opportunity to:

  • Upsell advisory services (cash flow, tax planning, real-time reporting).

  • Standardize processes across your client base.

  • Differentiate your firm as digital-first and future-ready.

The firms that position themselves now as MTD specialists will attract clients who are overwhelmed and searching for answers.

Final Word: Don’t Wait Until 2026

The truth is simple: April 2026 is closer than it looks. Migrating clients, retraining staff, and re-engineering processes takes time. The firms who move early will thrive. The firms who delay will scramble.

So ask yourself today:

  • Is every piece of software in your firm MTD-compatible?

  • Do your clients know what “digital record keeping” really means?

  • Are you educating now—or waiting until the last minute?

The clock is ticking. MTD isn’t just a deadline—it’s the next chapter of accounting.

🔥 Over to you: Are you already moving your clients to MTD-compatible platforms, or are you still weighing up bridging software?