‘Enshittification’ is a word that first entered a dictionary in 2022, when it was included in the Macquarie Dictionary (The Australian & New Zealand equivalent of the Oxford dictionary). The Macquarie Dictionary defined enshittification as: “The gradual deterioration of a service or product brought about by a reduction in the quality of service provided, and as a consequence of profit-seeking or extreme cost saving measures”,
The word, invented by British journalist Cory Doctorow, received greater recognition in 2024 when it was revealed in the New York Times that ‘enshittification’ was the worldwide English Dialect Society’s word of the year for 2023., with the Macquarie Dictionary naming it word of the year for 2024.
Even the highly respected Rebecca Cave, one of the UK’s leading expert on taxes and currently the Senior Tax Writer at AccountingWeb, used the word in a speech on 11th March 2025 at the Festival of Accounting at the NEC . However, on this occasion she was not referring to Facebook or Twitter (X), the original targets of Mr Doctrow, but good old HMRC.
Rebecca was commentating on the sudden announcement by HMRC, that they were closing their free online service for filing corporation tax returns and accompanying company accounts. She said: “Do you remember when Facebook was a fun way to keep in touch with family and friends, and Twitter was informative and interesting? Now Facebook is an endless stream of tedious adverts and videos, while Twitter is just X. These developments are both good examples of “enshittification”, which I believe is what we are now seeing with the UK tax service”.
The creeping cost of tax compliance
I agree with Rebecca Cave, as I, along with most accountants, believe that this erosion of the service provided by HMRC in all sectors, does not bode well for the future. Regular readers of this Blog will recall that in recent times, I have regularly commented on HMRC’s seemingly blind obsession to make any contact with them, only possible digitally. This may have been fine for the digitally savvy, however, even this group are being disadvantaged as HMRC have announced the withdrawal of their free corporation tax filing software.
This further reduces the number of HMRTC’s online filing services that, until relatively recently, had been provided free to taxpayers. Hand in hand with the introduction by HMRC of MTD (Making Tax Digital) these free services have been gradually and remorselessly, restricted or have been withdrawn completely.
Four weeks ago, Rebecca Cave asked HMRC to engage with small businesses and their accountants, on this important issue. Regrettably, all she has heard thusfar, is a deafening silence on the subject of who should be entitled to use free tax compliance software and who must pay to file. In the meantime, HMRC has continued to remove and restrict its free online filing services, which can only result in greater opportunities for commercial providers to sell software to those customers who have no choice but to pay to file or pay a penalty.
Small companies must carry the cost
The complete closure of the online service for filing company accounts and corporate tax returns at the end of the current tax year is a great shame. The current corporate filing service has been a very efficient way to file the annual CT600 return with the associated annual accounts, as well as sending in the company’s accounts for the same period to Companies House. The service automatically converts the figures in the accounts to the HMRC required iXBR format and also completes most boxes on the corporate tax return.
However, the service is restricted to relatively simple smaller companies. Currently, to use this free online filing service, the company must be a single trading company (not in a group), registered in the UK, with turnover not exceeding £632,000, and/or rental income of no more than £5,200.
The closure means that all companies will have to use commercial software to file their annual accounts and tax returns to HMRC. Companies House have also said that will in future, all filings must be made digitally using approved commercial software to submit their accounts or any other submissions to them
HMRC has compiled a list of approved software suppliers that produce suitable filing software but warns the taxpayer that they must choose a product that allows them to digitally file the CT600 form, corporation tax computation and the company accounts in iXBRL format.
And to put the final nail into the current filing arrangements, Companies House recently announced that they will not accept paper filing of accounts after 1 April 2026.
Why are HMRC doing this?
The closure of the free online corporate tax filing service appears to be driven by changes introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which requires more information to be filed at Companies House by small and micro-entity companies, including a profit and loss account.
HMRC are using powers granted under ECCTA to require that, figures in company accounts filed at Companies House, must be tagged using iXBRL. This tagging will allow HMRC to automate the comparison of accounts filed for tax purposes with accounts filed at Companies House, which currently can be totally different.
Whilst I accept that filings using the new software, will provide more security and trust in accounts, it does seem that a sledgehammer is being used to hit normally highly compliant micro-companies, when the real target is the tough nut of fraudulent accounts being submitted to Companies House.
Accountant’s view
I don’t think that I need to comment further other than to say that the ‘enshittification’ of HMRC is now almost complete!
