Only a small fraction of affected taxpayers have registered for the new HMRC reporting system, fewer than 30 days remain before Labour’s Making Tax Digital scheme comes into force.
Just 50,000 landlords and self-employed individuals have enrolled so far.
This represents roughly five per cent of the estimated 864,000 people who must sign up before the April 6 implementation date.
The figures mean more than 27,000 taxpayers would need to register each day in order for everyone affected to meet the deadline.
Under the new rules, individuals earning above £50,000 per year will be required to submit quarterly financial updates to HMRC.
They must also complete a year-end adjustment alongside a final declaration confirming their total income.
Nearly three million additional taxpayers are expected to be brought into the system during the next three years as income thresholds are gradually reduced.
Tax specialists have warned that widespread uncertainty around the new reporting requirements could lead to a surge of last-minute registrations.
Rachael Griffin, tax and financial planning expert at Quilter, said: “The low signup figures show that many people still do not understand what quarterly reporting will mean for them, and that gap in understanding risks becoming a pinch-point as we approach implementation.”
Three million additional taxpayers will be brought into the system
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Ms Griffin added: “The risk is a late scramble among those with mixed income sources who realise too late that the new reporting cycle is not optional.”
Accountants have also questioned whether the programme will deliver the efficiencies expected by HMRC.
Mike Warburton, tax expert at Telegraph Money, said: “It is all very well for HMRC to congratulate themselves on their success at getting 50,000 businesses and landlords to sign up, but this does not mean that they have bought into the HMRC notion that it will make everything more efficient.”
Mr Warburton said many accountancy firms are already undertaking extensive preparation work to ensure their clients comply with the new system.
Under the Making Tax Digital rules, all submissions must be made using HMRC-approved third-party software.
The penalty system for late or missing submissions will operate on a points-based structure similar to driving licence endorsements
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Nimesh Shah, a partner at accountancy firm Blick Rothenberg, said the Government believes the system could help reduce the UK’s tax gap.
He said: “The Government believes that MTD will help to reduce the £47billion tax gap, with the expectation that more regular reporting will increase accuracy and reduce errors.”
However, Mr Shah said ministers may have underestimated the additional administrative work created by the new system.
He noted affected taxpayers will now be required to submit five returns each year under the programme.
Mr Shah said the increase in reporting frequency could raise the risk of penalties if deadlines are missed.
Making Tax Digital was first announced in the 2015 Budget.
At that time, the Government had planned to complete the programme by 2020.
The rollout has faced repeated delays since then.
VAT-registered businesses were eventually required to join the system in 2022, three years later than originally planned.
A report from the National Audit Office in June 2023 warned the repeated postponements had affected confidence in the programme.
The watchdog said the delays had “undermined its credibility and increased its cost.”
Accountancy firms estimate the software will cost taxpayers at least £150
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Government spending on the programme has already exceeded £850million.
This figure is significantly higher than the budget originally set when the policy was first announced.
Industry estimates suggest that around three quarters of taxpayers affected by the scheme currently use professional tax agents.
These advisers are generally expected to have greater familiarity with the new reporting requirements.
The first mandatory quarterly returns under the scheme will be due on August 7.
HMRC has said that penalties will not be issued for late submissions during the first year of operation.
An HMRC spokesman said: “Thousands of sole traders and landlords are signing up every week, and we urge customers to check out our guidance on GOV.UK to find out more.”
