The MTD "Split System" Glitch: Why Your Tax Statement Might Be Lying to You

The Problem: Financial Data in Limbo

HMRC has confirmed that because data is being split between the old Self-Assessment system and the new MTD digital pilot system, your tax statement may not show the full picture.

What you might see on your statement:

• Payments on account listed as "Nil".
• Payments marked as "Transferred to Digital".
• A balancing payment for 2024-25 that doesn't seem to align with your 2025-26 credits.

Just because your account says "Nil" doesn't mean you don't owe money. The information is simply being held in two different HMRC databases that aren't currently "talking" to each other effectively.

How to Find Your "True" Tax Position

To ensure you don't underpay, you cannot rely on a single view. HMRC is advising affected taxpayers to:

1. Access their Personal Tax Account (or Business Tax Account).
2. View the MTD for Income Tax service and the Self-Assessment service together.
3. Manually reconcile the figures to calculate the actual amount due.

HMRC has begun writing to those affected, but the burden remains on the taxpayer to navigate multiple accounts to find the correct totals.

HMRC’s Hardline on Penalties

Perhaps most concerning is HMRC’s stance on the fallout from this glitch. Despite admitting that their own IT systems are causing the confusion, HMRC has stated they will not waive penalties for late payments on account.

If you rely on a confusing digital statement and fail to pay the correct amount by the due date, you could still face automatic fines and interest charges.

What This Means for the 2026 Rollout

With MTD becoming mandatory for nearly 900,000 sole traders and landlords (earning over £50,000) in April 2026, this glitch raises serious red flags. If the system struggles with a small group of volunteers, the massive influx of users in 2026 could see these technical "teething-problems" turn into a significant administrative crisis.

Harris and Co Advice

If you are part of the MTD trial or are worried about how your 2025/26 payments are being recorded, do not wait for an HMRC penalty notice. 

At Harris & Co, we understand that these technical shifts can be frustrating and time-consuming. We are closely monitoring these MTD developments to ensure our clients aren't caught off guard by system errors or unexpected penalties.

If you are concerned about how your payments are being recorded or need help navigating the transition to digital reporting, we are here to provide clarity and support. Get in touch with our team for expert guidance