A few years ago, we wrote a blog called "Top Ten Bookkeeping Tips" for new business owners in Crawley. It became our most-read article ever. Back then, the advice was simple: keep your receipts, stay organised, and don’t buy a Porsche with the VAT money.

But as we stand here in February 2026, the landscape is shifting.

With Making Tax Digital (MTD) for Income Tax currently scheduled to arrive for many taxpayers in April 2026, "good habits" are no longer just about being organised. They are about compliance.

The relaxed approach that worked in 2024 is unlikely to be sufficient under the new regime. HMRC’s move towards digital reporting brings stricter requirements, and failing to meet them could put you at risk of penalties.

Whether you are a sole trader in Horsham or a landlord in Three Bridges, here are the 10 bookkeeping mistakes that used to be "annoying" but could soon become compliance risks.

(Note: MTD rules and timetables are subject to change. Always check the latest HMRC guidance or speak to us for your specific position.)

1. The "Shoebox" Strategy

The Mistake: Keeping paper receipts in a box/bag/glovebox and handing them over once a year. 

Why it’s a Risk: Under the proposed MTD rules, you will be expected to keep digital records. Relying solely on a shoebox of paper with no digital backup is unlikely to be compliant. 

The Fix: Get into the habit of snapping a photo of every receipt using software like Dext, Xero, or QuickBooks immediately.

2. Using Basic Excel

The Mistake: Typing your income and expenses into a basic Excel spreadsheet. 

Why it’s a Risk: A standard spreadsheet on its own is not enough under MTD unless it is linked to HMRC through compliant "Bridging Software." Without that digital link, a standalone spreadsheet cannot submit your quarterly updates. 

The Fix: Switch to cloud software (Xero/QuickBooks) which handles the connection automatically, or ensure you have the correct bridging tools in place.

3. The January Panic Routine

The Mistake: Doing 12 months of bookkeeping in one weekend in January. 

Why it’s a Risk: MTD moves you to a system of Quarterly Updates. Instead of one deadline, you will have deadlines throughout the year. If you wait until the end of the year, you may miss multiple submission dates, which could eventually trigger penalty points. 

The Fix: Shift your mindset from "Annual" to "Quarterly."

4. Confusing Profit with Turnover

The Mistake: Thinking "I only made £20k profit, so MTD doesn't apply to me." 

Why it’s a Risk: Based on current guidance, the £50,000 MTD threshold is measured on your 

Total Gross Income (Turnover), not your profit. If you sold £60k of goods but spent £40k on materials, your profit is only £20k, but you are likely to be within the scope of MTD. 

The Fix: Check your total sales for the 2024/25 tax year immediately to see where you stand.

5. Mixing Business and Pleasure (Bank Accounts)

The Mistake: Using your personal current account for business expenses. 

Why it’s a Risk: Digital bookkeeping relies heavily on Bank Feeds. If you link your personal account to your software, you will pull in every personal transaction (from the weekly shop to Netflix), creating a messy record that is difficult to justify as accurate business bookkeeping. 

The Fix: Open a separate business bank account. It simplifies your digital records instantly.

6. The Auto-Code Trap

The Mistake: Letting your software guess the tax code. 

Why it’s a Risk: Software often defaults to 20% VAT on expenses that may be Zero Rated (like train travel) or Exempt (like insurance). If you blindly click "OK", you risk submitting incorrect data to HMRC.

The Fix: Learn the basics of tax codes or hire a bookkeeper to review your data before submission.

7. Ignoring Property Income

The Mistake: Thinking MTD is only for your "main job." 

Why it’s a Risk: The threshold is generally based on your 

Total Qualifying Income. If you are a self-employed consultant earning £35k and have a rental property in Gatwick earning £20k, your combined total is £55k. You may be required to report both income streams digitally. 

The Fix: Ensure your accounting system is set up to handle both trading and property income.

8. Guessing the Dates

The Mistake: Recording an invoice date as "when I got paid" rather than "when I did the work" (or vice versa, depending on your accounting basis). 

Why it’s a Risk: With quarterly reporting, the date determines which quarter the income falls into. Inaccurate dating moves income into the wrong tax period, which can distort your estimated tax position.

The Fix: Be precise. Use the correct dates as per the invoice or receipt.

9. Relying on Estimates

The Mistake: "I'll just put £500 for fuel and find the receipts later." 

Why it’s a Risk: Quarterly updates provide HMRC with a regular view of your data. Relying on round-sum estimates because you are behind on paperwork is risky. Your digital records should reflect actual transactions supported by evidence. 

The Fix: No receipt? No claim. (Unless you have a digital copy!)

10. Thinking "I'll Wait and See"

The Mistake: Assuming MTD will be delayed again or that penalties won't apply. 

Why it’s a Risk: While HMRC is expected to take a proportionate approach initially, a points-based penalty system is part of the MTD design. Ignoring the scheduled start date could be a costly oversight. 

The Fix: Start now. Even if you aren't perfect, getting a system in place today is far better than scrambling when the rules come into force.

Don't Let MTD Catch You Out

The transition to digital bookkeeping isn't just about avoiding issues; it's about building a better business.

If you are reading this list and realizing you’ve made a few of these mistakes—don't panic. There is still time to improve your processes before the new rules arrive.

We are helping dozens of Crawley business owners clean up their processes and get MTD-ready.

Need a Bookkeeping Health Check? Let’s review your current setup and ensure you are ready for the changes ahead.