Making Tax Digital is no longer a future concept for landlords and sole traders in the UK. With quarterly reporting, digital record-keeping and HMRC visibility soon to become the norm, the choice of software now directly affects compliance risk, admin burden and long-term tax accuracy.
Yet many taxpayers still treat software selection as a box-ticking exercise. As long as a tool can submit figures to HMRC, it is assumed to be “good enough”. In reality, not all MTD-compatible software is created equal — and the differences only become obvious once quarterly submissions begin.
MTD is about records, not just reports
One of the biggest misunderstandings around MTD is the belief that compliance starts and ends with submission. HMRC’s real focus is on the quality of the underlying digital records.
Under the Making Tax Digital for landlords and sole traders are expected to:
- Keep digital records continuously
- Maintain digital links between income, expenses and totals
- Submit quarterly updates based on those records
- Preserve consistency across reporting periods
Software that simply uploads numbers without enforcing structure often creates more problems than it solves. Over time, inconsistencies creep in, adjustments overwrite earlier data, and the audit trail becomes weak.
This is why the choice of MTD-compatible software should be driven by how it handles data day-to-day, not just whether it appears on an HMRC list.
The risks of choosing generic MTD tools
Many MTD tools were originally designed for general bookkeeping and later adapted to meet HMRC’s technical requirements. While these platforms may technically qualify as MTD-compatible software, they often struggle with real-world use cases.
For landlords and sole traders, common pain points include:
- Poor handling of property-specific income and expenses
- Limited support for joint ownership or profit splits
- Over-reliance on manual categorisation
- Weak audit trails when figures are amended
These issues rarely surface immediately. They appear months later, when quarterly figures no longer align or when HMRC queries discrepancies between submissions.
What HMRC recognition actually means
HMRC recognition confirms that software meets the technical criteria for MTD submissions. It does not guarantee that the software is suitable for your specific situation.
This distinction matters. A sole trader with irregular income has very different needs from a landlord managing one or more properties. The best MTD-compatible software acknowledges those differences and is built around them.
Rather than forcing users into generic categories, good platforms provide structured, HMRC-aligned charts of accounts that reduce errors before they happen.
Making the right choice
Choosing MTD software is no longer an administrative decision — it is a compliance strategy.
Landlords and sole traders should look beyond marketing claims and ask:
- Is the software HMRC-recognised?
- Does it support my income type properly?
- Can it maintain an audit-ready digital trail?
- Will it scale as my affairs grow?
When those questions are answered honestly, the value of well-designed MTD-compatible software becomes clear.
