Making Tax Digital for Restaurants: Missed the 7 August Update? Here's How to Fix It.

Making Tax Digital for Income Tax has been mandatory since 6 April 2026 for sole traders and landlords with qualifying income over £50,000, based on your 2024/25 return. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. If you run a restaurant, café, pub or bar as a sole trader above the threshold, you must keep digital records and file quarterly updates — the first update was due 7 August 2026.

A missed quarterly update means a single late-submission penalty point, not an immediate fine. HMRC charges a £200 penalty only once you reach four points, and points reset only after a sustained period of on-time filing. So one missed update is fixable: get your digital records and software in order and file the outstanding update as soon as possible, well before the next deadline on 7 November 2026. We can get you caught up and compliant quickly.

No. MTD for Income Tax applies only to sole traders and landlords. If your restaurant operates as a limited company, you are not affected by MTD ITSA. However, VAT-registered limited companies should already be complying with MTD for VAT, which has been mandatory since April 2022. If you are currently a sole trader and considering incorporation, this may be worth discussing as part of your tax planning — we can advise on the implications.

HMRC maintains an official list of MTD-compatible software. For hospitality businesses, the most commonly recommended options are Xero, QuickBooks, and FreeAgent. The best choice for your operation depends on your EPOS system compatibility, the number of revenue streams you manage, your VAT complexity (particularly mixed-supply rates for eat-in versus takeaway), and whether you need multi-user access. We assess your setup and recommend the software that fits best.

Many modern EPOS systems — including Square, Lightspeed, Clover, and iZettle — offer direct integrations with Xero or QuickBooks through APIs or built-in connectors. Older, bespoke, or less common EPOS systems may require middleware solutions or regular manual exports. We assess your specific EPOS setup as part of our MTD readiness review and find the most efficient path to integration, even if your current system was not designed with MTD in mind.

HMRC operates a points-based penalty system for late MTD submissions. Each late quarterly update earns a penalty point. Once you reach the threshold — 4 points for quarterly filing obligations — you receive a £200 penalty for each subsequent late submission. Points expire after a period of compliant behaviour but accumulate quickly if you miss multiple deadlines. There are also separate penalties for late payment of any tax that is due. The simplest way to stop the points stacking is to get compliant quickly and file everything on time from here.

Under MTD for Income Tax, you submit quarterly updates to HMRC within one month of each quarter end — the standard quarters run April to June, July to September, October to December, and January to March. After the fourth quarter, you submit an end-of-period statement confirming the annual figures, followed by a final declaration which replaces the traditional self-assessment return. That is six submissions per year in total, but your accountant can handle all of them on your behalf.

Yes, absolutely. You can authorise your accountant as your agent to submit all MTD filings on your behalf — quarterly updates, end-of-period statements, and final declarations. At LOYALS, we manage the entire quarterly filing process for our hospitality clients. You keep your records up to date and we handle every submission. You never need to log into HMRC's system or worry about filing dates.

The additional cost depends on your current setup. If you are already using cloud accounting software and keeping good digital records, the incremental cost may be modest. If you are transitioning from paper records or spreadsheets, there will be software subscription costs (typically £10–35/month) and initial setup time. We offer a free MTD readiness assessment where we identify exactly what you need and provide transparent pricing. Many clients find that the improved financial visibility from real-time digital records actually helps them make better business decisions and improve profitability.

Yes. All qualifying income counts toward the MTD threshold. This includes revenue from Deliveroo, Uber Eats, Just Eat, and any other delivery platforms, alongside your dine-in, takeaway, and catering income. If your combined income from all sources exceeds £50,000, you are within scope for MTD. Proper tracking of delivery platform revenue across multiple sources is essential for determining your threshold position accurately.

Under MTD, all business income and expenses must be maintained in digital format within MTD-compatible software. For restaurants, this includes daily sales data from your EPOS or till, delivery platform income and commissions, cash takings, all purchase invoices and supplier payments, staff costs and payroll data, rent, utilities, and other overheads. You can no longer maintain these records in spreadsheets or paper files — they must be in software that can submit data directly to HMRC through their API.