The UK's first-ever Making Tax Digital for Income Tax quarterly update deadline landed on 7 August 2026, and by most practitioner accounts, it did not go smoothly. The second deadline for the same cohort, 7 November 2026, is now a month away, and the firms that treat it as a repeat of August rather than a chance to fix what went wrong the first time are heading for the same problems twice.
This post looks at what actually happened in the first MTD for ITSA quarter, what the penalty points system means for a firm that misses more than one, and what's worth changing operationally before the November deadline arrives.
What Went Wrong in August, According to the People Who Lived It
The £50,000-and-over cohort of sole traders and landlords hit their first MTD for ITSA quarterly deadline on 7 August 2026. Practitioner discussion afterward, including a widely-shared ICAEW round-up of adviser experiences and a detailed AccountingWeb post-mortem, described a "mixed" result that leaned heavily toward frustrating. The specific, recurring problems were not really about the tax rules themselves. They were operational:
Submissions that said "success" weren't always received. Multiple practitioners reported a confirmation gap: their software showed a successful submission, but when the client checked their HMRC personal tax account, the update showed as not received. Agents and clients were looking at two different pictures of the same filing.
Quarter-selection settings didn't line up with the law. The legislation treats the choice of reporting quarters (calendar vs. standard tax quarters) as a taxpayer-level election, but some software allowed it to be set per business, which produced inconsistent elections for taxpayers with more than one income source — exactly the kind of multi-source case covered in our landlords and MTD post.
Registration errors were still unresolved days before the deadline. Some clients had been signed up for the wrong tax year or the wrong obligation type, and corrections submitted to HMRC hadn't processed in time, leaving agents racing a deadline they couldn't control.
Clients didn't engage until the last minute. Firms reported the familiar pattern of clients ignoring requests to connect bank feeds or hand over records until the week of the deadline — the same chasing problem firms have always had at annual Self Assessment, just compressed into a quarter instead of a year, and now repeating four times a year instead of once.
None of these are reasons to expect November to be easier by default. They're a list of specific things to check now, while there's still a month to act.
The Penalty Points System Is Live, Even If No One's Felt It Yet
As of the first deadline, there's no public reporting of HMRC having issued actual financial penalties yet — which may be part of why some firms are treating the first miss as a freebie. It isn't. Under the points-based late-submission regime that applies to MTD for ITSA, each missed quarterly update or return deadline adds one penalty point. Once a taxpayer accumulates four points, HMRC charges a £200 penalty, and every further late submission after that also costs £200.
Points don't just sit there forever, but clearing them isn't quick either, and the rules differ depending on whether you're above or below the threshold. According to guidance from Xero and Coconut, a taxpayer below four points has those points automatically expire after 24 months of no further misses. A taxpayer who has already hit four points has a higher bar: points only reset once every quarterly update and return due in the prior 24 months has actually been filed, and the taxpayer has gone 12 consecutive months filing everything on time. In other words, a single bad patch early in the MTD cycle, two or three quarters missed because of the kind of software and registration chaos seen in August, can leave a client carrying a penalty risk for a full two years afterward, long after the original problem has been fixed.
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This is the part worth explaining to clients directly: missing August because of a software glitch or a registration delay didn't cost anything yet, but it isn't a clean slate either. It's one point on a counter that resets slowly and expensively compared to how easily it fills up.
What's Worth Fixing Before 7 November
A few concrete things, drawn directly from what went wrong in August:
Confirm receipt on HMRC's side, not just the software's. Don't treat a "success" message in your filing software as the end of the task. Where possible, check the client's HMRC personal tax account directly for the November update, especially for any client where the August submission showed a status mismatch. This is a five-minute check that would have caught the exact problem several firms only discovered after the fact in August.
Check quarter elections for anyone with more than one income source. If a client has both self-employment and rental income, or two separate businesses, verify that the reporting-quarter election is actually consistent at the taxpayer level, not accidentally set differently per business inside the software. This is a known soft spot in how some platforms implemented the rule.
Chase outstanding registration issues now, not in the last week of October. If any client's MTD registration was flagged as wrong-year or wrong-type during the August cycle and the fix hasn't been confirmed, that's a call to make this week, not an assumption to carry into November.
Start the document chase earlier than last time. If August taught you which clients will not engage until the deadline is imminent, build the November timeline around that reality rather than hoping it's different this time. A structured, deadline-driven client workspace that shows each client exactly what's outstanding and sends reminders ahead of the date does more to move a slow client than another email does.
Treat Every Quarter as a Chance to Tighten the Process, Not Repeat It
The firms that come out of year one of MTD for ITSA in reasonable shape won't be the ones who had a perfect first quarter. Almost nobody did. They'll be the ones who looked honestly at what broke in August, specifically what broke for their own clients, and changed the process before the pattern had a chance to repeat on 7 November, 7 February, and 7 May.
That means a single, current view of who has and hasn't submitted, who has an unresolved registration issue, and who is sitting on a penalty point that needs explaining rather than ignoring. Chasing that information across email threads and separate software logins is exactly the kind of fragmentation that produced August's confirmation-gap problem in the first place: nobody had one place to see the actual state of a submission.
If your firm's MTD clients are generating more back-and-forth about submission status than they did at the equivalent point in August, it's worth seeing what a purpose-built, branded client workspace looks like in practice. Explore the Digital Workspace or start using Osuria to bring client communication, document collection, and deadline tracking into one place before the next quarterly deadline repeats the same confusion.