As Making Tax Digital for Income Tax Self-Assessment reshapes the UK tax compliance landscape, it is essential that ACCA members acting as agents adapt quickly these changes, balancing regulatory requirements, adherence to Professional Conduct in Relation to Taxation (PCRT), and robust client communication via engagement letters.

MTD for ITSA is applicable from April 2026 for self-employed individuals and landlords with qualifying income over £50,000 (with lower thresholds to follow in future years), requires digital record-keeping and quarterly submissions to HMRC.

This fundamentally changes:

• the compliance cycle
• increasing the frequency of reporting
• the need for real-time accuracy.

A key consideration is client readiness. You should assess whether clients have appropriate digital systems in place and can maintain compliant records. This may involve recommending suitable software, providing training, or offering enhanced bookkeeping services.

As per PCRT guidance, agents must ensure that they follow the principles particularly integrity and professional competence. They must ensure that they do not facilitate non-compliance and must proactively address gaps in client capability.

Data accuracy and completeness are also central. Quarterly updates under MTD are cumulative and errors can compound across the tax year. Agents must establish clear processes for reviewing client data, correcting errors promptly, and maintaining audit trails. PCRT emphasises the importance of reasonable care in preparing and submitting tax information; therefore, reliance on client-provided data must be balanced with appropriate verification procedures.

Another major consideration is workload and pricing. MTD introduces at least five submission points per year per client (four quarterly updates plus a final declaration). Firms should reassess their fee structures to reflect increased work and ensure transparency with clients. This aligns with PCRT’s requirement for clear communication regarding the scope and cost of services.

It is mandatory for agents to have engagement letters in place for all the services provided. They should be updated to clearly define responsibilities between the agent and the client. Specifically, they should address:

• who is responsible for maintaining digital records
• the scope of services (eg bookkeeping, quarterly submissions, year-end adjustments)
• deadlines and client obligations for providing information
• use of third-party software and associated risks
• fees and billing arrangements for additional submissions.

Clear wording helps manage expectations and reduces the risk of disputes. It also supports compliance with PCRT’s guidance on establishing the terms of engagement and ensuring clients understand their obligations. A template of schedule of services for MTD for ITSA is built in the engagement letters for tax practitioners. 

Additionally, agents must consider authorisation and access. MTD requires specific agent services account access, and firms must ensure appropriate permissions are in place. Cybersecurity and data protection should not be overlooked, especially given increased digital interaction and data exchange.

Finally, there is a professional duty to educate clients. Many taxpayers remain unaware of the practical implications of MTD for ITSA. Providing timely updates, guidance and support not only strengthens client relationships but also aligns with PCRT’s emphasis on acting in clients’ best interests while upholding the integrity of the tax system.

In conclusion, MTD for ITSA is more than a compliance change, it is a transformation in how tax services are delivered. Accountants must combine technical readiness with strong ethical standards, clear communication and well-defined engagement terms to navigate this transition successfully.

ACCA's MTD hub includes a number of articles, webinars and guidance which members may refer to meet their obligations.