How MTD late submission penalties work
HMRC uses a points-based late submission system for Making Tax Digital. Each missed deadline earns a penalty point; once you reach the points threshold, a £200 penalty applies, and further £200 penalties can follow for subsequent defaults. HMRC has signalled a more lenient approach to late quarterly updates in the first year of mandation, but points and penalties are designed to encourage on-time filing, so it's best not to rely on leniency.
What to do if you've missed one
- Bring your records for the period up to date
- Submit the outstanding quarterly update through your compatible software
- Diary your remaining deadlines so you don't miss the next one
- If you've fallen behind or aren't set up, get help to catch up
Don't forget the payment and tax return deadlines
The quarterly updates are reports. Your actual tax is calculated at the year-end tax return and is due by 31 January following the tax year — late payment and late final-declaration penalties still apply separately, so keep those dates in view too.
How the points reset
Points are not permanent. If you stay below the four-point threshold, each point expires two years after the month you received it. Once you have reachedthe threshold, you clear the points only by filing on time for a period of compliance (12 months for quarterly submissions) and making sure every submission due in the previous 24 months has been filed. So the sooner you get back on track, the sooner the slate clears.
The first-year easing (and what it doesn't cover)
If you are mandated from 6 April 2026, HMRC has confirmed no penalty points for late quarterly updates in the 2026 to 2027 tax year. Helpful — but it does not cover the tax return or late payment of tax, both of which are charged as normal. Treat it as a cushion, not a pass.
Can you appeal a penalty?
Yes — if you have a reasonable excuse such as serious illness, bereavement, or a genuine software or HMRC service failure. You normally have 30 days from the penalty to appeal, first to HMRC and then, if needed, the tax tribunal. Simply finding the software difficult is unlikely to qualify, which is why getting proper help to catch up matters.
Fallen behind? We can catch you up
If you've missed a deadline, aren't registered, or are still on the old system, call 0114 327 1480 or email shjenquiry@msc-g.com for a catch-up review.