HMRC’s 2026 compliance focus is not about one single deadline. It reflects a wider move towards digital records, more regular reporting and closer scrutiny of whether tax positions are supported by reliable information.

One of the clearest examples is Making Tax Digital for Income Tax. From 6 April 2026, individuals with qualifying self-employment or property income over £50,000 must use compatible software to keep digital records and send quarterly updates to HMRC. The threshold is due to reduce to £30,000 from April 2027 and £20,000 from April 2028.

Limited companies are not brought within MTD for Income Tax simply because these rules apply to individuals with qualifying self-employment or property income. However, the direction is still relevant for company directors and finance leaders. HMRC is increasingly focused on timely, accurate and well-supported information.

HMRC’s latest tax gap figures also show why compliance remains a priority. The provisional UK tax gap for 2024 to 2025 was estimated at 6.4%, or £59.2 billion, with small businesses accounting for the largest share by customer group.

For growing businesses, the practical question is not simply whether the next return can be filed on time. It is whether the records, reconciliations and reporting processes behind the tax position are strong enough to withstand review.

HMRC has published guidance on Making Tax Digital for Income Tax and its Tax Gap 2024 to 2025 estimated at 6.4%. These provide useful context for the wider direction of tax compliance and digital reporting.

Why this matters beyond filing the next return

Tax compliance can easily become a year-end exercise.

The return is prepared. The figures are reviewed. Any questions are dealt with close to the deadline. That may work when the business is small and straightforward, but it becomes less reliable as the organisation grows.

More transactions, more people, more systems and more entities usually mean more areas where mistakes can arise. VAT, PAYE, National Insurance, Corporation Tax, director loan accounts, employment status and overseas activity can all create pressure where the underlying records are weak.

HMRC’s focus on digital reporting and the tax gap reinforces a simple point: businesses need to be able to explain their tax position with evidence, not just submit figures at the end of the process.

What businesses should review now

The exact action required will depend on the type of business and which tax regimes apply.

A person within Making Tax Digital for Income Tax will need to consider software, quarterly updates and digital record-keeping. For companies, the immediate review may be different: VAT processes, payroll records, Corporation Tax reconciliations, director loan accounts, benefits and expenses, or the quality of tax information used in management reporting.

Useful areas to review include:

• Whether tax records are complete, accurate and easy to access.
• Whether VAT, PAYE, National Insurance and Corporation Tax balances are reconciled.
• Whether the business uses software that supports the reporting it needs to complete.
• Whether responsibility for tax filings is clearly assigned.
• Whether the finance team has enough time to review information before deadlines.
• Whether management accounts, statutory accounts and tax records tell a consistent story.
• Whether any historic tax issues need to be resolved before they become more difficult.
• Whether director loan accounts, benefits and expenses are reviewed before year end.
• Whether tax estimates used in cash-flow forecasts are based on current management information.

This kind of review is not about creating unnecessary paperwork. It is about making sure the business can rely on the figures it reports.

Digital compliance needs more than software

For those within MTD for Income Tax, compatible software is essential. HMRC requires users to keep digital records and send quarterly updates through software that works with Making Tax Digital.

But software alone does not create a good process.

The underlying records still need to be complete. Transactions need to be categorised correctly. Adjustments need to be understood. The person reviewing the information needs to know whether the figures make sense.

The same principle applies to companies, even where MTD for Income Tax does not apply. A business can have modern accounting software and still have weak reconciliations, unclear responsibilities, inconsistent tax reporting or figures that are not reviewed properly before submission.

Digital reporting works best when the process behind it is clear.

Common issues that create tax compliance pressure

Many tax problems do not start with the tax return itself. They begin earlier, in the records and controls behind it.

Common issues include:

• VAT control accounts not being reconciled regularly.
• Payroll records not matching PAYE submissions.
• Corporation Tax estimates being based on outdated management accounts.
• Director loan accounts not being reviewed until year end.
• Expenses or benefits not being recorded consistently.
• Software records not matching bank reconciliations.
• Filing responsibilities being unclear between the internal team and adviser.
• Historic tax issues being carried forward without a clear plan.

These issues become more disruptive when they are discovered close to a filing deadline, during a funding process or as part of buyer due diligence.

Questions directors and finance leaders should ask

A practical tax compliance review can be framed around a few direct questions.

For example:

• Do we know which HMRC changes apply to the business, and from what date?
• Are our tax records kept in a way that supports the filings we need to make?
• Are VAT, PAYE, National Insurance and Corporation Tax balances reconciled?
• Are we relying on any manual process that creates avoidable risk?
• Do our management accounts, statutory accounts and tax records align?
• Are tax estimates in our forecasts based on current numbers, or old assumptions?
• Does the board have enough visibility over tax risk?
• If HMRC, a lender or a buyer’s adviser reviewed our tax position, what would they question first?

These questions help move tax compliance away from a deadline-driven task and towards a more controlled part of financial management.

How this supports better decision-making

It would be easy to treat HMRC’s compliance focus as another administrative burden.

The more useful view is that better tax records often improve the quality of financial information more broadly.

Working through the position can highlight weaknesses in reporting, gaps in reconciliations, cash-flow exposure, inconsistent controls and areas where the board needs better visibility.

A business with a clean, well-documented tax position is generally in a stronger place when dealing with HMRC. It is also better prepared for funding conversations, investment, sale planning or due diligence.

Compliance matters, but the deeper value comes from clearer records, reliable evidence and greater confidence in the numbers being reported.

Responsibility for the tax position remains with the business and its directors, but good support can help management understand the issues that need attention.

Final thought

HMRC’s 2026 compliance focus is about more than one reform. Making Tax Digital for Income Tax, the latest tax gap figures and the wider move towards digital reporting all point in the same direction: tax information needs to be accurate, timely and supported by reliable records.

For growing businesses, the sensible response is to understand which rules apply, review the quality of the records behind each filing and address any unresolved issues early.

Because HMRC reforms are being introduced in stages, it is worth checking which rules apply to your business and from when, rather than assuming the position is the same for every taxpayer.

Accendo supports growing SMEs with corporation tax, accounts and advisory work where reliable records, clear reconciliations and practical judgement matter. For businesses reviewing tax reporting, preparing for digital compliance changes or strengthening financial visibility, an early review of the underlying records and reporting process can help reduce uncertainty before deadlines or external scrutiny arise.

This article is for general information only and reflects the HMRC position at the date of publication. It should not be treated as legal, accounting, tax, transaction, investment or governance advice. Specific advice should be obtained based on your circumstances.