Accountancy practice admin: 30 questions on MTD deadlines, penalties, AML and chasing records, answered

Question 1

When are the Making Tax Digital quarterly updates due?

Accepted Answer

On 7 August, 7 November, 7 February and 7 May, a month and two days after each standard quarter ends. A client with more than £50,000 of qualifying income on their 2024 to 2025 return has been in MTD for Income Tax since 6 April 2026, so the first two deadlines of the 2026 to 2027 year are 7 August and 7 November 2026.

Question 2

How much extra work does MTD for Income Tax add to a practice?

Accepted Answer

Four quarterly updates per client per year, on top of the final declaration. A practice with 120 clients over the £50,000 threshold has 480 extra submissions a year. The work is not the submission; it is getting the records in before each one, four times a year instead of once.

Question 3

What is the penalty for filing a Self Assessment return late?

Accepted Answer

£100 as soon as the return is late. After three months, £10 a day for up to 90 days. At six months and again at twelve months, 5% of the tax due or £300 if greater. Late payment adds 5% of the unpaid tax at 30 days, six months and twelve months, plus interest. A return filed on 20 April with £4,800 of tax paid that day costs £340 in penalties and about £80 in interest.

Question 4

What is the Companies House penalty for late accounts?

Accepted Answer

For a private company: £150 up to one month late, £375 for one to three months, £750 for three to six months and £1,500 beyond six months. The penalty doubles if the previous year's accounts were late as well, so 40 days late costs £375, or £750 the second year running. Relying on an accountant is listed among the reasons an appeal will not succeed by itself.

Question 5

Does an accountancy practice have to register with HMRC for anti-money laundering supervision?

Accepted Answer

Only if it is not already supervised by a professional body. A practice supervised by one of the 14 listed bodies, ICAEW and ACCA among them, does not register with HMRC. Whoever the supervisor is, customer due diligence applies to every business relationship and to occasional transactions of 15,000 euros or more, and records are kept for five years.

Question 6

Can an accountant verify a client's identity for Companies House?

Accepted Answer

Only if the practice is registered with Companies House as an authorised corporate service provider (ACSP). Otherwise the client verifies directly, free, through GOV.UK One Login. A person with significant control gets a 14-day window to supply their personal code once it is requested.

Question 7

When should a practice ask clients for their records?

Accepted Answer

On a date the practice sets, not the filing deadline. For MTD quarters, a records date 18 days after each period ends (23 July, 23 October, 23 January, 23 April) leaves 15 days for the work before the 7th. A client who sends records on the deadline leaves none.

Question 8

How many times should a practice chase a client for records?

Accepted Answer

Three, on a fixed schedule: a first request 24 days before the filing date, a reminder at 14 days and a final letter at 7 days that states the penalty the client faces and the date the practice can no longer guarantee filing. A client who replies to the reminder still leaves the practice a working week.

Question 9

What does accounting practice management software cost?

Accepted Answer

For a practice with 14 users and 600 clients, on prices published on 1 October 2026: Karbon's Team plan is £5,712 a year and its Business plan £8,232 on annual billing, BrightManager Essential £5,729.50 plus VAT, IRIS Elements Practice Management £3,091.20 on its 12-month rate, and TaxCalc's Engager £2,028, because it charges by client count, not by seat.

Question 10

Who has to use Making Tax Digital for Income Tax, and from when?

Accepted Answer

Sole traders and landlords with qualifying income over £50,000 from 6 April 2026, over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028. Qualifying income is gross self-employment and property income added together, before expenses, taken from the return two years earlier.

Question 11

Is a client's late filing penalty the accountant's problem?

Accepted Answer

Legally the penalty is the client's. In practice it becomes a complaint, a fee dispute or a lost client, and Companies House says reliance on an accountant is not a reasonable excuse by itself. The protection is a dated trail: the request, the reminder and the final letter, each stating the deadline and the penalty.

Question 12

Can AI do the chasing and deadline tracking in an accountancy practice?

Accepted Answer

Yes for the administrative part: tracking each client's deadlines, sending the records requests on schedule, drafting reminders and keeping the trail. It should not file a return, give tax advice or sign anything; a qualified person reviews and submits. Overlyft can set up an AI assistant that is built on that split.

Question 13

How much does Dext cost for an accountancy practice with 20 clients?

Accepted Answer

On Dext's practice pricing page, read on 1 October 2026, the Essentials plan is £240 a month before VAT for 20 clients: £12.00 a client on an annual subscription billed monthly. The Advanced plan is £260. AutoEntry charges by credit, not by client: £119.35 a month for 500 credits and £331.50 for 1,500.

Question 14

How do I write a disengagement letter to stop acting for an accountancy client?

Accepted Answer

Say in writing that the practice stops acting on a stated date, then cover the five things ICAEW lists: work done, work outstanding, the date each item is due, any further work the practice will do and the fees owed. Attach a status report of coming deadlines. Afterwards, remove the client separately from each HMRC online service.

Question 15

How long does an accountant have to keep a client's identity documents after the client leaves?

Accepted Answer

Five years from the end of the business relationship, under regulation 40 of the Money Laundering Regulations 2017. For a client who leaves on 30 October 2026 that runs to the end of October 2031. After that the personal data must be deleted, unless another law or legal proceedings require it or the person has consented.

Question 16

How much does HMRC anti-money laundering supervision cost a sole practitioner accountant or bookkeeper?

Accepted Answer

£740 in the first year for one office: a £300 application fee, a £400 premises fee and a £40 approval check. Each later year costs the £400 premises fee. HMRC says a new application can take up to 45 days to review. A practice already supervised by a professional body such as ICAEW or ACCA does not register with HMRC.

Question 17

What should I do if the previous accountant does not reply to my professional clearance letter?

Accepted Answer

Chase by another route, such as telephone, then write again by a tracked method saying you intend to accept the appointment unless you hear by a set date. ICAEW's code requires that second letter, and its helpsheet says a reply period under two weeks is unlikely to be reasonable. An enquiry sent on 5 October 2026 can be settled by 16 November.

Question 18

How long does a client have to accept an agent authorisation link for Making Tax Digital for Income Tax?

Accepted Answer

21 days. The agent creates an authorisation request in the agent services account and sends the client a link, which the client accepts by signing in with their own details. If it lapses, the agent sends a new one. A request sent on 5 October 2026 expires on 26 October, so chase on day 7 and day 14.

Question 19

Can an accountant put client data into ChatGPT?

Accepted Answer

Only with the client's consent, on the profession's own guidance. The seven PCRT bodies, ICAEW and ACCA among them, said on 19 January 2026 that putting client data into a publicly available AI tool is likely to breach client confidentiality unless the client has consented, and that anything entered should be anonymised so the client cannot be identified.

Question 20

How much does ChatGPT Business cost for a small accountancy practice, and does OpenAI train on what staff type in?

Accepted Answer

On 1 October 2026 OpenAI's pricing page showed ChatGPT Business at £15 a user a month billed annually, or £18 billed monthly, from two users. Fourteen seats come to £210 a month on annual billing. OpenAI says business data is not used to train its models by default; content on its personal plans may be, unless the user opts out.

Question 21

What is the 30 December Self Assessment deadline for?

Accepted Answer

A 2025 to 2026 return filed online by 30 December 2026 lets HMRC collect a balance under £3,000 through the client's PAYE tax code from 6 April 2027, in 12 equal instalments. The client must already pay tax through PAYE. Filed after that date, the whole balance is due on 31 January 2027.

Question 22

What happens if I register for Self Assessment after the 5 October deadline?

Accepted Answer

HMRC sends a new filing deadline: 31 January 2027 or three months from the date on its letter, whichever is later. The tax is still due on 31 January 2027. A failure to notify penalty can be charged on any tax unpaid at that date, at 0% to 30% where the failure was not deliberate.

Question 23

Can the previous accountant refuse professional clearance because the client still owes them fees?

Accepted Answer

No. ICAEW's helpsheet says outstanding fees are not a reason for failing to respond to a professional enquiry, though the reply may mention them. ICAEW also calls "clearance" a misnomer: the previous accountant has no authority to give or withhold it, and the decision to act belongs to the incoming accountant.

Question 24

How long does a self-employed client have to keep their business records?

Accepted Answer

At least 5 years after the 31 January filing deadline for the tax year, on GOV.UK's guidance. For a 2025 to 2026 return the deadline is 31 January 2027, so the records are kept until at least the end of January 2032. Company and VAT records are kept for 6 years and payroll records for 3.

Question 25

How long do I have to appeal an HMRC penalty?

Accepted Answer

Usually 30 days from the date the penalty was issued, which is the date printed on the notice, not the day it arrives. A £100 late filing penalty notice dated 17 February 2027 must be appealed by 19 March 2027. After that, HMRC must accept a late appeal only where there was a reasonable excuse and the request was made without unreasonable delay.

Question 26

How much does it cost to file a confirmation statement and to set up a company at Companies House in 2026?

Accepted Answer

On the Companies House fee list read on 1 October 2026, the confirmation statement costs £50 online or £110 on paper, paid once in each 12-month payment period. Incorporating a company costs £100 online or £124 on paper, and £156 for the same day service through software. A change of name is £20 online and a voluntary strike off is £13.

Question 27

Does an accountant charge VAT on a Companies House fee paid for a client?

Accepted Answer

Not if the fee is passed on as a disbursement. GOV.UK lists eight conditions, among them that the practice paid as the client's agent with the client's permission, shows the cost separately on the invoice and passes on the exact amount. A £50 fee rounded up to £60, or rolled into a fixed fee, does not meet them, so a VAT-registered practice adds VAT.

Question 28

Can an accountant keep a client's records until an unpaid bill is paid?

Accepted Answer

Only where four conditions are all met, on ICAEW's guidance: the documents belong to the client who owes the money, they reached the practice by proper means, the practice has done work on them, and the unpaid fee is for that work. A limited company's accounting records and statutory books cannot be held at all, whatever is owed.

Question 29

What are the steps to move a client into Making Tax Digital for Income Tax?

Accepted Answer

Our checklist has 26 steps in five stages: deciding whether the client is in, the practice's access at HMRC, the sign-up, software and records dates, and the first update. Signing the client up is step 13. The shortest clock is HMRC's 21-day authorisation link: one sent after 17 October 2026 is still open when the 7 November update falls due.

Question 30

What does an accountant have to do when taking on a new client?

Accepted Answer

Four jobs run at once: the enquiry to the previous accountant, identity and risk checks, the engagement letter, and access to the client's tax records at HMRC. Our checklist puts them in 26 steps. The enquiry is the slowest, running to day 42 on ICAEW's figures. HMRC's authorisation link lasts 21 days, and a person with significant control has 14 days to supply a personal code.