MTD for Income Tax: correcting digital records after a quarterly update
Consider a hypothetical sole trader already using Making Tax Digital for Income Tax who sends a first quarterly update showing £4,500 of expenses. Weeks later, they notice that one £500 purchase was entered twice, once from a scanned receipt and again from the bank feed. The year does not have to start again. HMRC's guidance sets out how to correct digital records, and because each update covers the year to date, a correction made before the fourth update flows into the next one.
Correct the record at its source
HMRC's guidance on creating digital records says a correction can mean changing, deleting or creating a record, and that errors should be corrected as soon as possible. Where records are kept in one product and submitted through bridging software, the correction is made in the records and carried across through the digital link. HMRC also notes that bank feeds may need extra category detail or separate records, and that the digital records remain the taxpayer's responsibility.
Here, the duplicate is the bank-feed copy of a purchase already captured from its receipt. We recommend removing or reversing one entry through the software's own correction function and keeping a short note of why, with the receipt and bank line attached, so the change is easy to follow later.
Sources and context, checked :
Before the fourth update, the next update carries it
HMRC's quarterly update guidance explains that updates send category totals, while individual receipts and invoices stay in the records, and that each update covers the tax year to date. A corrected earlier record therefore changes the next cumulative total.
The second update is a year-to-date figure of £7,000, which already includes the first period. The duplicate needs no separate entry as a refund or new payment. The example assumes the category and treatment of each expense were already settled. It shows record correction and says nothing about whether an expense is deductible.
| Figure | Amount | Explanation |
|---|---|---|
| First update as sent | £4,500 | £4,000 of genuine expenses plus the £500 duplicate |
| Genuine expenses in the second period | £3,000 | New spending in the period |
| Second update without the correction | £7,500 | Would repeat the duplicate |
| Second update after the correction | £7,000 | £4,000 + £3,000, year to date |
Sources and context, checked :
After the fourth update, two routes
Sometimes the error is found only after the fourth update has been sent. HMRC's digital records guidance then allows either of two routes. One is to correct the records and resend that update. The other is to adjust the category total in the software and reflect the change in the digital records. Either way, the corrections need to be made before the Income Tax position for the year is finalised. HMRC's quarterly update page adds that where a fourth update needs resending, this happens before any tax adjustments are made.
Where an agent submits for a client, agree who changes the underlying records, so that the software totals and the records still match afterwards.
Keep two situations apart. A genuine supplier refund received later in the year is a new transaction, recorded when it happens, and it stays in the records. This article covers errors corrected before the tax position is finalised. Errors in a return already filed, and VAT corrections, follow separate rules.
Confirm the correction
Saving a change in the software does not by itself mean HMRC has received it. For the latest correction, compare the original entry and your note with the corrected category total. If the correction is sent in a quarterly update, keep that update's submission confirmation. If you use the category-total route after the fourth update, check that the digital records reflect the same correction before finalising the year's Income Tax position. Where an agent is involved, agree who makes and checks each change.