A new HMRC tax return rule is now mandatory and being enforced as of May 2026. Those who break the rules under the new Making Tax Digital (MTD) scheme face staggering penalties of up to £10,000 for compliance breaches.
Conveyancing solicitors and payroll teams must now register with HMRC if they submit tax returns for customers. Rick Schofield, a tax partner at Azets, an accountancy and business advisory firm, warned: "There are going to be some costly errors made by unsuspecting organisations or individual sole traders who assist other people with their tax affairs."
He added: "This compliance shake-up is going to catch a lot of people out, the good as well as the bad, such as when it comes to stamp duty returns or chasing a PAYE code."
Who Is Affected by the New HMRC Tax Rule?
Rick explained: "The new regulations will affect all tax advisers who interact with HMRC on behalf of their clients – and tax advisers are those who provide professional tax advice and services, such as a conveyancing solicitor, but might not necessarily fall into the sole remit of accountants."
He continued: "Payroll teams are not exempt either – you must register even if it is an email or portal enquiry to chase a PAYE code for a member of staff."
Potential Pitfalls and Registration Advice
Rick noted: "Perhaps, to be on the safe side, partnerships may decide that it would be somewhat prudential for each partner to register with HMRC, even if they don't submit the paperwork to HMRC in the normal course of their duties. It has been mooted by the accountancy profession, to Parliament, that the registration places unfair burdens on smaller tax adviser firms when compared to larger ones."
He added: "Of course, everyone is looking to HMRC for an exhaustive dos and don'ts list, but nothing is forthcoming yet, adding to a sense of filing doom from May. People just want clarity and guidance."
Impact on Individual Taxpayers
Rick said: "However, individual taxpayers may be affected if their tax advisers are no longer able to act on their behalf because they are either unable to satisfy the new registration requirements imposed on (UK-based and overseas) tax advisers, or if their tax adviser is subject to sanction."
He concluded: "You may see individual taxpayers left in expensive limbo, and facing late penalty fines, if their agents decline to send documentation to HMRC for whatever reason."
