Do accountants need separate MTD IT software, or will existing tools cover it?

All MTD IT quarterly updates and Final Declarations must be submitted through HMRC-recognised compatible software. Software that isn’t on HMRC’s recognised list can’t be used for compliant submissions, regardless of how well it handles bookkeeping or tax in other respects. That’s a harder requirement than it sounds, as plenty of well-established accounting tools have not yet achieved full MTD IT recognition, and some cover only part of the workflow.

There are two compliant routes:

1. Full compatible software: Which is a recognised platform that holds the client’s digital records and submits quarterly updates directly to HMRC.

2. Bridging software: The client maintains records in a spreadsheet, which links electronically to bridging software that handles the HMRC submission. The spreadsheet must be electronically linked to the bridging tool.

The choice between these approaches has real implications for practice workload. Full compatible software automates the data flow. Bridging software requires a manual step at each quarter end to initiate the link and verify the submission.

This blog is part of our series, Making Tax Digital for Accountants: Your Complete MTD IT Compliance Guide.

What does the MTD IT quarterly submission process actually involve?

Understanding what’s required at each quarterly deadline is the starting point for deciding whether existing tools are adequate. Bright’s quarterly updates guide sets out the full submission process. Each quarter, clients must submit a summary of their business income and expenses to HMRC using recognised software. The quarterly update isn’t a tax return, it’s a reporting step that keeps HMRC’s picture of the client’s tax position current throughout the year.

What that means in practice is that clients need to have their income and expense records maintained digitally throughout each quarter, not reconstructed from paper receipts at the end. If existing bookkeeping tools require manual data entry or aren’t linked to an HMRC-recognised submission platform, each quarterly deadline becomes a manual burden for your firm.

For practices that want to see the full MTD IT workflow from digital record-keeping through to quarterly submission in one place, check out this video. It covers how the end-to-end process works in a connected MTD IT setup.

Does existing bookkeeping software cover MTD IT?

Some do, but not all. The complications typically arise with clients who have mixed income sources, where some platforms handle the multi-income-source quarterly update workflow better than others.

It’s also worth checking whether the bookkeeping software covers the full annual workflow, including quarterly updates and Final Declaration. Some platforms cover the quarterly submission layer but require a manual data transfer to a tax platform for the final declaration.

If existing bookkeeping software is already on HMRC’s recognised list and covers the full workflow for the client types in the practice, it may well be sufficient. A practical starting point is Bright’s MTD ITSA software guide, which outlines what to look for in an MTD-ready tool and where the gaps in most standard bookkeeping platforms tend to appear. You also take a read of how to master quarterly updates with BrightBooks.

Does existing tax software cover MTD IT?

For practices using established tax platforms, MTD IT support is typically built in or actively in development. The key questions to put to your current software provider are:

• Is the software on HMRC’s MTD for ITSA recognised list?

• Does it cover quarterly updates and final declarations, or just some steps?

• Does it handle multiple income sources within a single client?

That last point matters more than it might appear. A tax tool that handles MTD IT submissions but doesn’t connect to the practice management system means someone is maintaining a separate tracker to know which clients have filed for each quarter and which haven’t. For a practice with 80 or 100 MTD-eligible clients, that’s a meaningful admin overhead on top of the submission work itself.

What’s the case against bridging software for practices managing a large MTD portfolio?

Bridging software is a compliant route, but it doesn’t scale well. The model puts a manual step into the process every single quarter. For a small number of clients, it’s workable. For a practice managing 50 or more MTD-eligible clients, the quarterly manual overhead compounds quickly. for further information, check out our blog on how bridging software makes MTD IT simple for spreadsheet clients.

When does a separate or purpose-built MTD IT solution make sense?

A purpose-built MTD IT solution is worth evaluating when:

• The practice has a significant MTD-eligible client portfolio, especially if the number is growing substantially for the 2027 and 2028 thresholds

• Existing tools cover some but not all of your MTD IT workflow

• The practice wants portfolio-wide visibility of submission status across all MTD IT clients without a separate tracking spreadsheet

Practices that treat MTD IT as a bolt-on to their existing stack typically end up with more complexity and confusion, not less. Bright’s full MTD for ITSA software overview is a good reference point for understanding what a connected MTD IT solution looks like in practice, and how it differs from a patchwork of partially compatible tools.

How does the Bright MTD IT suite compare to Xero and QuickBooks?

The Bright MTD suite covers the full workflow:

• BrightBooks' document capture tool for client-side receipt capture

• BrightBooks by Bright for digital record-keeping and quarterly submissions

• BrightTax by Bright for the final declaration for MTD IT

• BrightManager by Bright tracks MTD IT submission status across the whole portfolio

Each component connects to the next, so data doesn’t need to be re-entered between stages.

The main alternatives are Xero (strong MTD functionality within its bookkeeping tier, less coverage at the practice management and tax layer) and QuickBooks (solid self-employed and landlord MTD support, limited bureau-specific capability). For practices already on the Bright platform, the MTD IT workflow is native.

For practices on a disconnected stack, MTD IT is a natural inflection point to evaluate whether consolidating around a connected suite makes operational and commercial sense.

For a full picture of what MTD-ready software can look like and how to evaluate whether existing tools are genuinely fit for purpose, Bright’s MTD IT quarterly updates resource covers the submission mechanics in detail, and this walkthrough video shows exactly how a connected MTD IT workflow can operate, from record-keeping through to submission.

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.