The Ghost of Making Tax Digital Makes Its Return

By Damon Anderson, 2 July 2026. 3 minute read.

There are only two certainties in life. Thankfully only one of them is scheduled quarterly.

The first MTD for Income Tax quarterly period closed 30 June and submissions are due 7 August. A significant chunk of the sole traders and landlords in scope have not started. Not behind. Not started.

For practices, the workload hump question is not hypothetical. It is sitting in the inbox right now.

Record OS jumps through the window

A former Wise team has picked their moment carefully to enter the race. Record OS recently announced a $2M pre-seed from Episode 1 with self-assessment and tax filing for sole traders, freelancers, and anyone with a complex return, timed directly into the MTD wave. Every filing is checked by a qualified tax professional before it goes to HMRC. Software handles the data. A human signs off the submission. Angels from Wise, Revolut, Deliveroo, and Alphabet.

FreeAgent ships rental statement capture

Landlords are the other group in scope at the £50k threshold. FreeAgent shipped automated rental statement capture: income extraction straight into MTD-compliant records. Closing the input gap for exactly the client type most affected by this week's deadline. Not glamorous. But exactly right.

Starling's "job done" bites them on the backside

When Starling launched Accounting Essentials in March, a free bookkeeping and MTD submission tool for sole traders, it positioned the product as the tax question answered. "Not quite," said the market. First, there is a real accuracy gap. Some analysis from Lucy Cohen looked at a fully reconciled ledger and found 18% of entries had no corresponding bank entry for the same period.

But the bigger stir was the accountant side-step. They can't be 'invited in' to support their client with the return. Given Starling's historical focus on building its accountant partner channel, the "job done" framing was a proper own goal. This whole episode was reminiscent of Intuit's previous gaffes (who remembers QuickBooks Live), with Intuit's CEO having to say the quiet part loud this week.

HMRC is shutting down the workarounds while they 'figure things out'

While practices are struggling to handle the deadline workload, HMRC aren't helping by cracking down on screen-scraping tools many firms built to aggregate client tax data because the official APIs were not good enough. Those workarounds are now a direct threat to agent access. The only sustainable path forward is authorised API integration, still available only to software vendors. Ouch.

The bigger picture

MTD is the first real stress test for AI in tax compliance at scale. Starling bet that AI-categorised bank data was good enough. Record OS launched with human review on every submission as a core product principle. Two different bets on how much you can trust the model. My take? I'm not ready to sleep in the back while the Tesla drives me home, just yet.

The vendors who get this right are the ones who understand where AI earns trust and where it still needs a human in the loop. In tax, the cost of being probably right is a penalty notice. And no-one likes them.