Making Tax Digital: The Readiness Gap Small Businesses Cannot Ignore
Oxfordshire accountants Ridgefield Consulting are urging owners to prepare for the next stage of Making Tax Digital. Their warning raises a broader business question: could your records survive a busy month without falling behind?
A business can have customers, a capable accountant and a subscription to accounting software, yet still struggle to produce reliable financial information when it is needed.
Receipts remain in email inboxes. Sales are recorded in one place and refunds in another. The owner assumes the accountant has everything, while the accountant waits for missing paperwork.
That is the practical risk highlighted by a press release circulated by Ridgefield Consulting on 12 October. With the next stage of Making Tax Digital for Income Tax approaching, the Oxfordshire firm is encouraging sole traders and landlords to check their position and prepare their records.
For business owners, the useful question is how to turn that warning into a routine that works during an ordinary, demanding week.
What the first figures actually tell us
HMRC announced on 12 August 2026 that more than 436,000 sole traders and landlords had submitted their first quarterly update. The deadline had been 7 August. Its announcement also acknowledged that some customers still needed to submit. [1]
Ridgefield's release compares that figure with a population estimate of 864,000 to suggest that nearly half missed the deadline. That comparison needs care.
The 864,000 figure comes from HMRC statistics published in August 2025 using 2023/24 tax return information. HMRC explicitly says the actual population affected depends on the relevant tax year's information. The August 2026 announcement does not establish that its submission count is a count taken precisely at the deadline. [1][2]
Those figures therefore do not, on their own, establish an exact missed deadline rate. They do provide a reason to examine preparation, without presenting an estimate as a confirmed compliance statistic.
Why modest profits do not settle the question
Under HMRC's published guidance, sole traders and landlords with qualifying income above £30,000 in 2025/26 must use Making Tax Digital from 6 April 2027, unless an exemption applies. Qualifying income combines gross income from self employment and property before expenses. [3]
For example, an illustrative business with £36,000 of qualifying income and £20,000 of expenses could have only £16,000 of profit and still exceed the entry threshold. The owner's impression of how much they earn is not a substitute for checking the relevant figures.
Ridgefield's managing director, Simon Thomas, makes the operational point clearly in the release:
“This isn't just a software change. It means keeping records up to date throughout the year rather than gathering receipts in January.”
His warning is useful because it directs attention towards the work behind the submission. Software can help organise information, but someone still needs to supply it, check it and deal with anything missing.
My view: test the handovers
My view is that owners should examine the points where information changes hands. These are easy places for responsibilities to become unclear.
An owner may send a folder of receipts and believe the bookkeeping is finished. A bookkeeper may reconcile the bank account but leave several transactions awaiting explanations. An accountant may prepare the submission while assuming that all sales have been included.
Each person can complete their part while the overall process remains incomplete.
A useful preparation exercise is to take one recent month and follow the information from the original transaction to the finished records. Choose a normal month that includes something awkward, such as a refund, a cash payment or a payment processor deducting its fee.
Can you explain what happened, find the supporting record and show how it was recorded? Can someone else follow it without relying on your memory?
Treat any uncertainty as a problem to resolve before the next deadline. This exercise also gives your accountant concrete questions to answer, rather than a general request to “sort out Making Tax Digital”.
Three checks before declaring yourself ready
1. Can every income source be traced?
List the places where business money arrives, including bank transfers, card processors, cash and any relevant platforms. Check how those records reach your bookkeeping. A net payout from a platform may need explaining alongside its underlying sales, refunds and fees. Agree the correct treatment with your accountant.
2. Does each task have a named owner?
Write down who captures records, checks unexplained transactions and submits updates. Agree when information must be supplied and what happens if someone is unavailable. If you do everything yourself, give those tasks separate appointments in your diary.
3. Have you tested your actual software setup?
HMRC provides a software finder, including options that work with spreadsheets. Check that your chosen product supports your circumstances and the work you expect it to do. Practise with real records and agree access with your accountant. Buying software is only one step in becoming ready. [4]
Do not confuse a temporary concession with spare time
HMRC is not applying penalty points for late quarterly updates for the 2026/27 tax year. That concession does not extend to quarterly updates for 2027/28. Under the published rules, missed submission deadlines attract points and reaching four points triggers a £200 penalty. Further missed submission deadlines at the threshold attract further £200 penalties. [5]
The concession also does not remove the requirement to keep records and send updates. Reporting and payment obligations need separate attention.
For a fuller explanation of eligibility, reporting dates and preparation, read our existing guide, Making Tax Digital 2027: What Sole Traders Must Do Now. [6]
What can businesses learn from this?
The wider lesson is that readiness should be demonstrated through a working process.
Knowing the deadline is useful. Being able to find the right information, resolve a discrepancy and complete the work when you are busy is a stronger test.
Choose one recent month this week. Check the records, identify the gaps and agree who will resolve them. Then use the same process the following month.
Better records can also support decisions between tax deadlines: which invoices remain unpaid, which costs have increased and whether a service is producing the return you expected. Those benefits depend on reviewing the information as well as collecting it.
Ridgefield's warning deserves attention because it offers owners time to act. The most useful response is to make the routine work before the deadline puts it under pressure.
Sources and attribution
Based on a press release from Ridgefield Consulting, including comments from managing director Simon Thomas, with additional research and analysis by Julian Frincu.
[1] HMRC, 436,000 sole traders and landlords make their tax digital, 12 August 2026:
[3] HMRC, Find out if and when you need to use Making Tax Digital for Income Tax:
[4] HMRC, Find software that works with Making Tax Digital for Income Tax:
[5] HMRC, Penalties for Making Tax Digital for Income Tax:
Official guidance checked on 12 October 2026. Readers should use HMRC's eligibility guidance or their accountant to establish their individual position.
Julian Frincu
Founder of Skills 2 Grow, supporting start-ups and customer experience.
Join the Skills 2 Grow Business Growth Community
Ongoing business support, increased visibility and valuable professional connections for £25 per month.
Join the Community