Only around half (53%) of firms have already adopted software to prepare for MTD, ICAS said, while few accountants have been able to trial the service as the pilot programme is very limited.

From April 2024, all businesses with annual income from self employment or property above £10,000 will have to follow MTD rules. This is expected to affect 4.4m taxpayers and will eliminate many of the existing paper-based processes used to file self assessment returns.

David Menzies CA, ICAS director of practice, said: ‘With only 18 months until MTD ITSA becomes a requirement, the state of unpreparedness can be largely attributed to the slow progress of HMRC’s pilot project which remains open to only a very small number of individuals.

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