Making Tax Digital·6 min read·Updated 2026-06-29

What happens if you miss a Making Tax Digital quarterly update?

What happens if you miss an MTD quarterly update: the points system, when the £200 penalty hits, late-payment penalties and the 2026/27 soft landing.

Quick answer: Each missed MTD quarterly update earns you one penalty point. Hit four points and you get a £200 fixed penalty — and another £200 for every further late submission while you stay at the threshold. Late payment is penalised separately. In 2026/27 (the soft-landing year) the four quarterly updates carry no points for the £50,000 cohort, but the final declaration is not covered. See what a missed update would cost you.

Missing a quarterly update is not the same as missing a tax payment, and the two are penalised under completely separate systems. This guide walks through both, so you know exactly what is at stake — and where the 2026/27 soft landing protects you.

Late submissions use a points system, not an instant fine

For MTD ITSA, HMRC uses a points-based penalty model for late quarterly updates rather than fining you the moment you slip.

Here is how it works:

One point per missed submission. Each quarterly update you file late adds a single point to your tally.
Four points is the threshold. Once you reach 4 points, you receive a £200 fixed penalty.
Stay at the threshold and it keeps costing you. While you remain at 4 points, every further late submission triggers another £200 penalty.

So the first three late updates do not cost you money directly — they cost you points. It is the fourth that brings the £200, and after that each additional lateness is another £200 until you bring your record back into line.

When do penalty points expire?

Points are not permanent. If you stay under the threshold, your points expire after 24 months of good behaviour. In other words, an old slip-up drops off your record after two years provided you have not breached the threshold in the meantime.

If you are at the threshold (4 points), the rules are stricter — points only clear after a longer, compliance-based period during which you must submit everything on time. The message is simple: the closer you are to four points, the more important an unbroken run of on-time updates becomes.

The MTD penalty calculator lets you model your current points and see when the next £200 would land.

Worked example: how four late updates play out

Imagine you file all four 2026/27 quarterly updates late, in a year outside the soft landing:

Update 1 late → 1 point. No fine.
Update 2 late → 2 points. No fine.
Update 3 late → 3 points. No fine.
Update 4 late → 4 points. £200 penalty.

If you then filed a fifth submission late while still at the threshold, that would be another £200. The penalty is fixed at £200 each time — it does not scale with the size of your income or tax bill.

Late payment is penalised separately — and it does scale

Missing a payment is a different matter, and from April 2026 the late-payment regime works like this:

Day 15: a penalty of 3% of the tax still unpaid.
Day 30: a further 3% of the tax still unpaid.
From day 31 onwards: a penalty that accrues daily at an annualised 10% on the outstanding amount.

On top of those penalties, late-payment interest runs from day 1 at the Bank of England base rate plus 4%. Interest and penalties are separate charges — you can face both.

There is a first-year easement: in the first year of the new rules you get a 30-day grace period, so no late-payment penalty applies if you pay (or arrange a Time to Pay plan) within 30 days. That grace reduces to 15 days after the first year.

Worked example: a £5,000 bill paid 45 days late

Take £5,000 of tax paid 45 days late, in a year that is not the first year (so the 15-day easement applies):

First penalty (3% at day 15): roughly £300.
Second penalty (~3% at day 30 on the still-unpaid amount): roughly £21.
Interest (base rate + 4%, from day 1): roughly £51.

That is around £372 in penalties and interest on a single late payment — and the daily 10% penalty would keep building if it stayed unpaid. Late payment clearly costs far more than a late submission. Model your own figures with the penalty calculator.

The 2026/27 soft landing — and its limits

HMRC has confirmed 2026/27 is a soft-landing year. For the £50,000 cohort newly mandated from 6 April 2026, no penalty points apply to the four quarterly updates in that first year. It is breathing room to adjust to digital record-keeping and the quarterly rhythm.

But read the small print:

The final declaration is NOT covered. The soft landing protects the four quarterly updates only. File your final declaration (due 31 January 2028 for 2026/27) on time, or normal penalties apply.
Late-payment penalties and interest still apply. The soft landing is about submission, not payment. If you pay tax late in 2026/27, the day-15, day-30 and daily penalties — plus interest from day 1 — are all live (subject to the first-year payment easement).

So the soft landing removes the points risk on quarterly updates, but it does not make 2026/27 a consequence-free year. Paying late, or missing the final declaration, still bites.

What to do if you have missed one

File the late update as soon as you can through your software. The sooner you are back on track, the sooner your 24-month clock can start.
Check where you sit on points — if you are near four, prioritise an unbroken run of on-time submissions.
If you cannot pay, contact HMRC about a Time to Pay arrangement before the easement window closes — arranging one within the grace period can prevent a late-payment penalty.
Diarise the deadlines. The four 2026/27 dates are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027 — see the MTD quarterly deadlines guide.

Frequently asked questions

Do I get fined the first time I miss a quarterly update? No. The first late submission earns one penalty point, not a fine. The £200 fixed penalty only applies once you reach four points.

How much is the MTD late-submission penalty? £200, charged when you hit the four-point threshold, and another £200 for each further late submission while you remain at the threshold.

Are penalties paused during the 2026/27 soft landing? For the £50,000 cohort, no points apply to the four quarterly updates in 2026/27. But the final declaration is not covered, and late-payment penalties and interest still apply throughout.

What is the penalty for paying my tax late? From April 2026: 3% of the unpaid tax at day 15, a further 3% at day 30, then a daily penalty at an annualised 10% from day 31 — plus interest from day 1 at base rate + 4%. A first-year 30-day grace period (reducing to 15 days afterwards) can prevent the penalty if you pay or arrange Time to Pay in time.

Do penalty points ever disappear? Yes. If you stay under the threshold, points expire after 24 months. At the threshold, clearance takes a longer, compliance-based period of on-time submissions.

Late submissions cost points then £200; late payment costs a percentage of your tax plus daily charges and interest. Know which is which, and use the MTD penalty calculator to see your exposure before a deadline catches you out.

Guidance only, not tax advice. Based on HMRC rules as at June 2026.