What Happens If You Miss an MTD Quarterly Update?

The points-based penalty system

MTD uses a new late filing penalty system that replaced the old Self Assessment surcharges. Instead of an immediate fine for a first late submission, HMRC builds up a points tally. For quarterly filers, the penalty threshold is four points:

The design is deliberately lenient in year one. If you have a bad quarter — a family emergency, an illness, a busy period — you get three free misses before any money is taken. Missing all four quarterly updates in a year would hit the threshold and trigger the first £200.

Year-one soft landing (2027–28)

From 2028–29 onwards, the full points system applies. If you get into the habit of sending quarterly updates on time during 2027–28, you will not need to worry about the penalty system in year two.

How to reset your penalty points

Points expire automatically after a period of good compliance. For quarterly filers, the reset period is 24 months from the date you reached the threshold, provided:

1. All overdue submissions have been made (even if late — they just need to be in).
2. Every subsequent quarterly update has been filed on time for 24 consecutive months.

Once both conditions are met, HMRC resets your points to zero. There is no application process — the reset happens automatically when the conditions are satisfied.

What to do if you've missed a deadline

Submit the late update as soon as possible. HMRC's system records a point regardless of whether you eventually submit, but submitting late is better than not submitting at all because:

• Clearing overdue submissions is a prerequisite for the 24-month reset clock to start.
• Not submitting leaves the period's income and expense data missing from your running tax estimate, which can cause problems when you file your final declaration.
• HMRC can open a compliance check for missing updates, which carries additional consequences.

If the missed update was because of a genuine emergency — bereavement, serious illness, natural disaster — you can appeal the penalty point using HMRC's reasonable excuse process. This works the same way as the existing Self Assessment reasonable excuse appeal. Contact HMRC or your accountant to initiate an appeal before the deadline, which is 30 days from the date on the penalty notice.

Points vs. the old system

Under the old Self Assessment system, missing the 31 January deadline triggered an automatic £100 fine the same day — even if you filed the next day. The points system is more forgiving for occasional lapses but equally strict for repeat late filers who never clear the backlog.

The key difference is that under MTD, habitual promptness is rewarded — the 24-month clean slate means consistent on-time filers can effectively treat the occasional missed update as a free pass, so long as they catch up quickly and don't let points accumulate to the threshold.

Quarterly update deadlines at a glance