Six out of ten UK accountancy practices are spending more time per client since the introduction of Making Tax Digital for Income Tax (MTD ITSA), while 27% have gained clients as a direct result, according to research by Bright Software Group.
Bright surveyed “hundreds of accountants in practice across the UK” after the first quarterly submission deadline on 7 August.
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Its report, MTD ITSA: The State of the Nation After Q1, combines HMRC filing data with accountants’ feedback collected in August and September 2026, ahead of the second deadline on 7 November.
The report describes a live but unsettled system.
Around 864,000 sole traders and landlords with qualifying income above £50,000 ($66,982) entered the MTD regime in April 2026. By 1 September, 583,480, or 67%, had registered.
HMRC data shows that only 54% filed their first quarterly update by the August deadline, leaving almost half yet to report.
Since September, HMRC has auto-enrolled taxpayers who did not register voluntarily.
Bright found that filing itself was generally not the main difficulty, with most practices spending less than 30 minutes per client on the submission.
The greater burden involved creating digital records and communicating with clients. Overall, 60% of companies reported spending more time per client than before MTD.
Seven in ten MTD clients do not use bookkeeping software. Instead, 33% use spreadsheets and 37% retain paper records.
More than half of practices, 55%, manually enter paper records for clients, while 39% use no receipt-capture tool.
Bright’s data also shows that 24% of submissions were made through Excel imports rather than native record-keeping.
Practices also encountered system issues, including submissions not recognised by HMRC and registrations linked to the wrong tax year.
Among companies reporting success, 53% cited software choice and 42% client segmentation.
Bright Software Group Product for Accountancy vice-president Paul Onions said: “The first quarter has shown that MTD is not really a filing problem.
“Most practices can submit an update in under half an hour. The pressure is coming from everything before that point, chasing clients who still aren’t signed up and keying in paper records on their behalf.
“That is high-volume, low-margin work and it is landing on practices at exactly the moment they can least afford it.”
