Digital tax administration is central to contemporary public-finance reform, yet SMEs’ organisational responses to coercive digital mandates remain incompletely understood. We examine the United Kingdom’s Making Tax Digital programme, introduced in April 2019, which requires VAT-registered firms above the £85,000 turnover threshold to maintain digital records and submit returns via approved software. Using eight waves of the Longitudinal Small Business Survey from 2015 to 2023, we exploit the VAT threshold in a regression-discontinuity–inspired difference-in-differences design and extend to a triple-difference framework to assess heterogeneity by engagement with professional accountants. Drawing on the Technology–Organisation–Environment framework and innovation intermediation theory, we examine whether mandated digitalisation is associated with greater in-house software adoption or instead with substitution toward intermediary-provided compliance, and how perceived compliance burden evolves over time. We find that software use rises across SMEs after MTD, but firms subject to the mandate increase in-house accounting software use less than comparable non-mandated firms, with a smaller increase among firms that engage accountants. Event-study estimates indicate a pronounced decline in perceived tax-compliance burden for approximately two years following implementation before returning to baseline; this temporary reduction is attenuated or reversed among firms relying on accountants. These findings suggest that coercive digital mandates can reshape compliance arrangements without necessarily producing parallel internal capability development, and that early implementation effects on perceived burden may be time-limited and contingent on the structure of professional intermediation.