- 0191 447 9119
- office@lscaccounting.co.uk
23 June 2026
Making Tax Digital is not just another HMRC phrase. It is changing how businesses keep records, manage tax information and submit returns.
For many businesses across Sunderland, Washington, Houghton-le-Spring and the wider North East, the main challenge is not the idea of going digital. It is knowing whether the current setup is good enough, whether the software is compliant and what needs to happen before the rules apply.
At LSC Accounting, we work with local business owners who are already busy enough running shops, trades businesses, rental properties, small companies and growing teams. Making Tax Digital should not become another source of stress. With the right setup, it can make your records clearer, reduce last-minute admin and give you a better understanding of where your business stands.
Making Tax Digital is part of HMRC’s move towards a more digital tax system. It means businesses and individuals within the rules must keep digital records and use compatible software to submit information to HMRC.
For VAT-registered businesses, Making Tax Digital is already part of the way VAT returns are handled. Records need to be kept digitally and VAT returns need to be submitted through compatible software.
The next big area is Making Tax Digital for Income Tax. This will affect many sole traders and landlords, depending on qualifying income and the relevant tax year.
In simple terms, Making Tax Digital means your records need to be accurate, digital and connected. It is not enough to keep paper notes, disconnected spreadsheets or records that only get pulled together when a deadline is close.
A lot of North East businesses are practical, hands-on and time-poor. Many local business owners are out on site, serving customers, managing staff or keeping up with day-to-day work. The admin often gets pushed to evenings, weekends or the end of the quarter.
That is where Making Tax Digital can either help or become a problem.
If your system is set up properly, it can make record keeping easier. Invoices, expenses and bank transactions can be captured regularly, which gives you a clearer picture of your finances throughout the year.
If your system is not set up properly, problems can build up quickly. You may have missing receipts, incorrect VAT codes, duplicated transactions or software that does not connect to HMRC in the right way.
For businesses in places like Shiney Row, Washington, Sunderland, Durham and across the North East, the aim is simple. You need a system that works in real life, not just on paper.
VAT-registered businesses should already be working under Making Tax Digital for VAT unless an exemption applies.
Making Tax Digital for Income Tax is being phased in for sole traders and landlords. The date you need to start depends on your qualifying income and the tax year involved.
This means the rules may apply to people such as:
Sole traders with growing income
Landlords with rental property income
Individuals with both self-employment and property income
Business owners who currently submit Self Assessment returns
People who still rely heavily on spreadsheets or paper records
Even if the rules do not apply to you immediately, it is worth preparing early. Waiting until the deadline is close can make the change feel rushed and stressful.
Making Tax Digital is not just about pressing a button to submit a return. HMRC expects the full process behind the submission to be digital and accurate.
That means your business may need:
Digital records of income and expenses
Compatible accounting software
Correctly connected systems or digital links
Regular updates instead of one big year-end catch-up
A clear process for reviewing records before submission
This is where many businesses get caught out. They may believe they are compliant because they use software, but the way the records are entered, checked or transferred may still need improving.
Some businesses can still use spreadsheets, but they usually need approved bridging software to connect the spreadsheet data to HMRC.
The important point is that information should flow digitally. Manually copying and retyping figures between systems can cause errors and may not meet the requirements.
For some businesses, spreadsheets still work well when they are structured properly. For others, moving to cloud accounting software such as Xero, QuickBooks, FreeAgent or another compatible system may save time and reduce mistakes.
The right answer depends on how your business works, how many transactions you have and how confident you feel managing the records.
Many businesses are not trying to get anything wrong. They are simply trying to keep up while running the business.
Common problems include records only being updated near a deadline, VAT codes being applied incorrectly, receipts being missing, bank feeds not being reconciled and software not being authorised properly with HMRC.
Another common issue is relying on a system that worked fine when the business was smaller, but no longer suits the volume of transactions or complexity of the accounts.
As a local accounting team, we often find the best starting point is not to replace everything straight away. It is to review what you already have, find the gaps and create a cleaner process that works for your day-to-day routine.
We help businesses set up, review and maintain Making Tax Digital systems in a way that is practical and easy to follow.
That may include reviewing your current bookkeeping process, checking whether your software is suitable, setting up digital records, connecting software to HMRC and making sure you understand what needs to happen each month or quarter.
We can also support the wider accounting process, including bookkeeping, VAT, Self Assessment and year-end accounts. This matters because Making Tax Digital works best when your records are kept tidy throughout the year, not fixed in a rush at the end.
Our aim is to keep the process straightforward. We explain what needs to change, what can stay the same and what will make your records easier to manage.
Making Tax Digital is much easier to deal with before a deadline arrives.
If you prepare early, you have time to choose the right software, clean up your records, test the process and get used to working digitally. You also reduce the risk of mistakes caused by rushed setup or missing information.
For sole traders and landlords, early preparation is especially important because Making Tax Digital for Income Tax changes the rhythm of reporting. Instead of thinking about tax once a year, you need a system that keeps records updated throughout the year.
That does not mean you need to become an accounting expert. It means your process needs to be organised, supported and ready.
Before you assume everything is sorted, ask yourself:
Are my income and expenses recorded digitally?
Is my software compatible with Making Tax Digital?
Are my bank transactions reconciled regularly?
Do I understand what needs to be submitted and when?
Do I know whether Making Tax Digital for Income Tax will apply to me?
Can my accountant access the records they need without chasing paperwork?
If the answer to any of these is unclear, it is worth reviewing your setup now.
We are based in Shiney Row and support businesses across the surrounding area, including Washington, Sunderland, Durham and the wider North East.
We understand that small business owners do not want complicated explanations or unnecessary software for the sake of it. They want a system that works, keeps them compliant and helps them understand their figures.
That is exactly how we approach Making Tax Digital. Clear advice, practical setup and ongoing support when you need it.
If you are unsure whether your records, software or submission process is compliant, we can help.
Book a free call with LSC Accounting and we will review where you are now, explain what needs to happen next and help you get your Making Tax Digital setup working properly.
Book a free call and get a fixed-fee plan for your company accounts.
