How to appeal an HMRC penalty

Read the notice for three things: which obligation you are said to have missed, which tax year or period it relates to, and the date of issue. The date of issue starts the clock. GOV.UK's guidance on disagreeing with a penalty states that you usually have 30 days from that date to appeal, unless the notice itself sets a different date on the reverse. Everything else on the page follows from correctly identifying those three items.

Separate late filing from late payment. They are distinct penalties with distinct triggers, and a single envelope can contain both. For Self Assessment, GOV.UK sets out a late filing penalty of £100 as soon as the deadline passes, then daily penalties of £10 a day up to a maximum of £900 once the return is three months late, then a further charge of 5% of the tax due or £300 — whichever is greater — at six months and again at twelve months. Late payment penalties are separate: 5% of the tax still unpaid at 30 days, at six months and at twelve months, with interest running alongside.

Check whether the penalty is HMRC's at all. A late filing penalty for company accounts is issued by Companies House, not HMRC, and it has its own appeal service and its own much narrower grounds — Companies House says appeals generally succeed only where unexpected circumstances such as serious illness or a death occurred close to the filing deadline, or where Companies House made a mistake. Being dormant, being unable to pay, or having relied on an accountant are listed as reasons that will not succeed. Sending a Companies House appeal to HMRC wastes the deadline.

For employers, the payroll penalties are a third family again. HMRC charges monthly late filing penalties for real time information based on headcount — £100 for one to nine employees, £200 for ten to 49, £300 for 50 to 249 and £400 for 250 or more — and there is a concession where the Full Payment Submission is late but every payment reported on it falls within three days of payday. These are appealed through the PAYE for employers online service using the unique ID printed on the penalty notice.

Note whether the tax is direct or indirect, because the route differs. For direct taxes — Income Tax, Capital Gains Tax, Corporation Tax, National Insurance contributions and Inheritance Tax — you appeal to HMRC first and can then ask for a review. For indirect taxes such as VAT, excise duty and customs duty, HMRC offers a review in the decision letter itself and you can usually go straight to the tribunal instead. GOV.UK's tax tribunal guidance is explicit about that split.

Finally, separate a penalty for missing a deadline from a penalty for getting a figure wrong. Inaccuracy penalties arising out of a compliance check are calculated on behaviour and disclosure and are argued on completely different ground; our guide to handling an HMRC compliance check covers that machinery. This page is about the penalties that are charged simply because something arrived late, or did not arrive at all.

Most people appealing a £100 Self Assessment penalty do not actually dispute that the return was late. They dispute that they should have been in Self Assessment in the first place — self-employment that ended two years ago, a property that was sold, a High Income Child Benefit Charge that no longer applies, a one-off capital gain long since reported. Arguing reasonable excuse in that situation is arguing the wrong point. The right point is that the notice to file should be withdrawn.

Section 8B of the Taxes Management Act 1970 gives HMRC the power to withdraw a notice to file, either on request or of its own motion. The withdrawal has to be given in writing and must specify the date from which it takes effect. Crucially, section 8B also allows the withdrawal notice to carry cancellation of a liability to a penalty — the obligation goes, and the punishment for missing it goes with it. HMRC can still issue a fresh notice for the same year later if circumstances change.

There are limits. HMRC cannot withdraw the notice if you have already delivered a return in response to it, or if it has made a determination of the tax due under section 28C. And there is a withdrawal period: two years beginning with the end of the year of assessment the notice relates to, which HMRC may extend in exceptional circumstances. That is a real deadline, and it is the reason a three-year-old penalty is much harder to shift than a recent one.

The practical route is the online form on GOV.UK for telling HMRC you no longer need to send a tax return. You sign in to your HMRC account, supply your National Insurance number and Unique Taxpayer Reference, and either close the Self Assessment record entirely or ask for a specific tax year to be removed. If you cannot use the online form you can do it by phone or post. HMRC reviews the request and writes to confirm whether you still need to file, and you can track the form's progress in your online account.

Timing is the trap. GOV.UK warns that you must tell HMRC as soon as possible, because it needs time to consider the request before the 31 January deadline, and that a penalty may follow if you leave it too late. In practice this means: if a return notice has landed for a year in which you had nothing to report, deal with it in the autumn, not on 30 January.

If the request is refused, or you are outside the withdrawal period, you are back to filing the return and appealing the penalty on other grounds. Do both in that order. A reasonable excuse appeal against a late filing penalty is very difficult to run while the return is still outstanding, because the statutory test asks whether the failure was remedied without unreasonable delay once the excuse ended.

GOV.UK defines a reasonable excuse as something that stopped you meeting a tax obligation despite taking reasonable care to meet it, and publishes a list of examples. Accepted examples include the death of a partner or close relative shortly before the deadline, an unexpected hospital stay, a serious or life-threatening illness, computer or software failure while preparing the return, problems with HMRC's own online services, fire, flood or theft, unpredictable postal delays, delays related to a disability or mental illness, being unaware of or misunderstanding your legal obligation, and relying on someone else to file who then did not.

The published list of things that are not a reasonable excuse is shorter and blunter: you could not pay, you found the HMRC system too difficult to use, you did not get a reminder from HMRC, or you made a mistake on your return. Two of those are also statutory. Paragraph 23 of Schedule 55 to the Finance Act 2009 provides that an insufficiency of funds is not a reasonable excuse unless attributable to events outside your control, and that reliance on another person is not a reasonable excuse unless you took reasonable care to avoid the failure.

The same paragraph carries the condition that decides most borderline cases. Where an excuse existed and then ceased, you are treated as having continued to have it only if the failure was remedied without unreasonable delay after it ceased. In plain terms: a hospital admission in January is a reasonable excuse for a return that was then filed in March. It is a much weaker one for a return still outstanding the following December. File first, then argue.

HMRC's own Compliance Handbook sets out how the question is decided, following the Upper Tribunal's decision in Christine Perrin. The approach has four stages: establish what facts the taxpayer says amount to a reasonable excuse; decide which of those facts are proved; decide whether, viewed objectively, those proved facts amount to a reasonable excuse for this taxpayer given their experience, knowledge and circumstances; and then decide when the excuse ended and whether the failure was remedied without unreasonable delay.

The burden of proof splits in a way that is worth knowing. The handbook records that HMRC must first establish, with evidence and on the balance of probabilities, that the events giving rise to the penalty happened at all — assertion is not enough, and if it cannot the penalty must be cancelled. Only then does the burden shift to you to prove the facts underlying your excuse. That is why an appeal that simply asks HMRC to show the notice to file was validly issued and served is sometimes more productive than a narrative about the year you had.

Ignorance of the law occupies its own guidance and is more nuanced than the folklore suggests. HMRC's manual accepts that it can be a reasonable excuse where the person made genuine efforts to understand their obligations and missed a specific requirement, where it was objectively reasonable for someone in their position to be unaware of the obligation, or where a suitably qualified agent given the full facts failed to advise them. It is not an excuse where the person simply was not contacted by HMRC, encountered an unfamiliar transaction and did not investigate its tax consequences, received advice and did not try to understand it, or delayed unreasonably once they discovered the problem.

There is a second, separate lever if reasonable excuse fails. Paragraph 16 of Schedule 55 lets HMRC reduce a penalty because of special circumstances, and 'reduce' expressly includes staying the penalty or agreeing a compromise. The same paragraph excludes ability to pay, and excludes the argument that one person's underpayment is balanced by another's overpayment. Special reduction is discretionary, rarely volunteered and worth asking for by name in the appeal letter, particularly where the facts are sympathetic but do not quite reach the reasonable excuse threshold.

For Self Assessment, HMRC runs an online appeal service for the £100 fixed late filing penalty, and you sign in with a Government Gateway user ID — creating one during the process if you do not have one. Before you start, GOV.UK says to have the date the penalty was issued, the date you filed the return if you have filed it, the date you paid if you have paid, and the details of your reasonable excuse. Anything that is not a £100 fixed penalty goes on paper form SA370, or SA371 for a partnership return.

If no form came with the notice and none applies, write. GOV.UK's guidance says a signed letter to the relevant HMRC office should carry your name and reference number — your Unique Taxpayer Reference for Self Assessment — and explain why the return or payment was late, with dates. Where the failure was caused by a technical problem, give the date you tried, what you were doing and the exact error message. Specificity is what converts an assertion into evidence.

For VAT penalties charged under the regime that began in January 2023, HMRC offers a review in the penalty decision letter and you can accept it through your VAT online account, or write to HMRC's Solicitor's Office. For older default surcharges the route is form WT2. For employer payroll penalties, use the 'Appeal a penalty' option inside PAYE for employers and quote the unique ID for the specific penalty; HMRC notes there is no print function, so screenshot the confirmation.

Write the appeal around the statutory test rather than around your feelings about it. Say which penalty you are appealing and its reference. Say what the excuse is, when it started and when it ended. Say when you filed or paid, and why that was without unreasonable delay once the excuse ended. Attach the evidence — a discharge summary, a death certificate, a screenshot of the error, an email from the agent. Then, in a separate paragraph, ask for special reduction under paragraph 16 in the alternative.

You do not have to pay a penalty upfront in order to appeal it. GOV.UK's tax tribunal guidance states that plainly, and the guidance on delaying payment says that where a penalty has been appealed, payment is suspended until the appeal is concluded. HMRC's Self Assessment appeal guidance nonetheless suggests you may want to pay anyway, because interest runs from the penalty's due date if the appeal is rejected — and if the appeal succeeds HMRC repays what you paid with interest from the date you paid it. Which of those you prefer is a cash-flow judgement, not a legal one.

Missing the 30 days is not fatal. Section 49 of the Taxes Management Act 1970 requires HMRC to agree to a late appeal where you have asked in writing, HMRC is satisfied there was a reasonable excuse for not appealing in time, and it is satisfied the request was made without unreasonable delay once that excuse ended. If HMRC does not agree, the tribunal can give permission instead. Make the request explicitly — say you are asking HMRC to accept a late appeal under section 49 and explain the delay separately from the substance of the appeal, because they are two different questions.

A statutory review is a fresh look at the decision by an HMRC officer who was not involved in making it. GOV.UK says reviews normally take 45 days, and the review officer will tell you if more time is needed. When you ask for or accept one, give your name, your reference number and — the part people skip — why you disagree. The review officer can uphold the decision, vary it, or cancel it outright.

The review is worth taking even when you expect to lose it. It costs nothing, it does not remove your right to go to the tribunal, and it produces a written explanation of HMRC's reasoning that is far more useful in front of a judge than a penalty notice is. Reviews are also where straightforward evidential mistakes get corrected — a return HMRC has not linked to the right year, a payment allocated to the wrong reference, an address the notice was never sent to.

If the review does not resolve it, you have 30 days from the date of the review conclusion letter to appeal to the First-tier Tribunal (Tax Chamber). GOV.UK is explicit about that deadline, and it is a different 30 days from the one that started with the penalty notice. The tribunal is part of HM Courts and Tribunals Service and is independent of HMRC; there is no fee to appeal, and you can represent yourself.

The tribunal also hears appeals against decisions of Border Force, the National Crime Agency, the Welsh Revenue Authority and the Gambling Commission in relation to the Economic Crime Levy. GOV.UK recommends trying a review first because it is quicker and cheaper, but a review is not a precondition for a direct tax appeal in the way mandatory reconsideration is for benefits — the precondition for direct taxes is that you appealed to HMRC in the first place.

Alternative dispute resolution sits alongside all of this. GOV.UK notes you can explore ADR after appealing to the tribunal; it brings in an HMRC mediator who has not been involved in the case, and it does not remove the tribunal appeal. It is most useful where the facts are disputed or communication has broken down rather than where the disagreement is about the law.

Payment during a tribunal appeal is not the same for every tax. For direct taxes you can ask to postpone payment of the disputed amount, in writing, to the office that issued the decision, within 30 days of appealing or asking for a review; HMRC confirms in writing if it agrees, and interest can still run on tax that turns out to be due. For indirect taxes the disputed tax is generally not collected while a review is running, but you normally have to pay before the tribunal hears the appeal — unless you make a hardship application to HMRC's Solicitor's Office and Legal Services.

For VAT periods starting on or after 1 January 2023, the default surcharge was replaced by a points-based system. Each late return earns one penalty point. When you reach the threshold for your filing frequency you are charged £200, and £200 again for every further late submission while you remain at the threshold. HMRC sets the thresholds by frequency: two points for annual returns, four for quarterly and five for monthly.

Several returns are outside the regime entirely — the first return after a new registration, the final return after deregistration, and one-off returns covering a non-standard period. Changing your filing frequency adjusts both your threshold and your existing points, and if you take over a VAT-registered business as a going concern, HMRC says the points do not transfer to your registration number.

Making Tax Digital for Income Tax brings the same architecture to Self Assessment. HMRC's guidance sets a four-point threshold for people required to use MTD for Income Tax from April 2026 and a two-point threshold for volunteers, with a £200 penalty at the threshold and £200 for each subsequent missed deadline. There are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year, and you only get one point per missed deadline even if you run several businesses.

Points expire, which is the feature that makes the regime survivable. Points below the threshold are removed automatically 24 months after the missed deadline. Once you are at the threshold, automatic expiry stops and you have to earn the reset: HMRC requires you to submit everything on time for 12 months and to send any outstanding quarterly updates and returns for the previous 24 months. Miss one thing in that 12-month period and the clock restarts.

Late payment penalties under the new regime are time-graduated rather than fixed. For VAT, HMRC's guidance sets out no penalty in the first 15 days, a first penalty of 3% of the VAT outstanding at day 15 if you pay or agree a payment plan between days 16 and 30, and from day 31 a first penalty of 6% — 3% at day 15 plus 3% at day 30 — together with a second penalty accruing daily at an annual rate of 10% on the balance until it is paid. The MTD for Income Tax figures follow the same shape, at 3% and 10% for 2026 to 2027 and 4% and 10% for 2027 to 2028, with a first-year easement giving 30 days from the due date before penalties start, reducing to 15 days afterwards.

The practical consequence is that a phone call beats an appeal. HMRC states that proposing a Time to Pay arrangement at any point can result in lower or no late payment penalties, and that penalties are paused from the date you contact HMRC if a plan is agreed and you keep to it. Break the agreement and HMRC can cancel it and charge the penalties as though it had never existed.

Points and penalties under this regime are appealed the same way as any other penalty — review or tribunal, on reasonable excuse grounds. But the argument shifts: because a single point carries no charge, the useful appeal is often against the point that took you to the threshold, and the evidence you need is about that specific period rather than about a pattern of lateness.

A penalty appeal does nothing about the tax. If tax is genuinely owed and you cannot pay it, the fix is a Time to Pay arrangement, and GOV.UK's guidance is that HMRC will assess whether instalments are affordable and will expect payment in full if no plan can be agreed. Ask before the due date rather than after. HMRC agrees these routinely with people who approach early and can show a realistic budget, and considerably less readily once enforcement has started.

Do not let the return sit unfiled while you argue. The Self Assessment penalty structure is designed to punish continued non-filing far harder than initial lateness: the £100 is followed by daily penalties, then by tax-geared penalties at six and twelve months. HMRC publishes a calculator to estimate what a given return and payment date will cost, which is a useful reality check on whether to keep arguing or simply file.

Filing also protects the excuse. The statutory test in Schedule 55 requires the failure to be remedied without unreasonable delay once the excuse ends, so every additional month the return is outstanding weakens the appeal you are trying to make. Where the delay is caused by missing records, file on best estimates, flag the figures as provisional and amend later rather than not filing at all.

If HMRC has made a determination of the tax due because you did not file, note that this closes off the withdrawal route under section 8B — HMRC cannot withdraw the notice to file once a determination under section 28C has been made. It is another reason the notice-to-file argument has to be raised early, before the file moves on without you.

Keep complaints and appeals apart. Appeal if you think the penalty decision is wrong. Complain if the handling was wrong — lost post, repeated requests for information already sent, wrong advice on the phone. The Adjudicator's Office reviews complaints about HMRC once HMRC's own first and second reviews are exhausted, normally within six months of the second review, and it can be reached on 03000 571 111. It expressly cannot look at complaints where there is a specific right of determination by a court or tribunal, so it is not a back door into re-arguing a penalty you could have appealed.

Get help if the amounts are large or the years are many. TaxAid is a charity that helps people on low incomes with exactly this — tax bills, penalties and Self Assessment problems — on 0345 120 3779, and assesses eligibility on income, debts and circumstances when you call. It is free, and it is far better used before a deadline passes than after.

HMRC administers Income Tax, National Insurance, Corporation Tax, VAT, Capital Gains Tax and Inheritance Tax across the whole United Kingdom, so everything above applies identically in all four nations. Scottish and Welsh rates of Income Tax are set at Holyrood and in the Senedd but collected by HMRC, and a late Self Assessment return is penalised the same way in Inverness as in Ipswich.

Fully devolved Scottish taxes are a separate system. Revenue Scotland administers Land and Buildings Transaction Tax, Scottish Landfill Tax and the Scottish Aggregates Tax, and runs its own penalty regime. The structure looks familiar — £100 for a late LBTT return, £10 a day for up to 90 days once it is three months late, then £300 or 5% of the unpaid tax whichever is greater at six months and again at twelve — but the authority, the forms and the tribunal are all different.

Revenue Scotland's late payment penalties are also 5% based, charged within 30 days of the due date, then again within five months of that first penalty, and again within eleven months. It can reduce, suspend or cancel a penalty where you satisfy it that you had a reasonable excuse and have since met the obligation. You have 30 days from the notice to pay or appeal, a review is optional rather than a precondition, and appeals go to the Scottish Tribunals — not to the UK First-tier Tribunal.

Wales works on the same principle with its own statute. The Tax Collection and Management (Wales) Act 2016 establishes the Welsh Revenue Authority, sets out penalties for failure to make returns or pay tax in Part 5, and provides the review and appeal machinery in Part 8. Land Transaction Tax and Landfill Disposals Tax penalties are WRA penalties, and appeals against WRA decisions go to the Welsh Tribunal — although GOV.UK's tax tribunal guidance notes the First-tier Tribunal also hears certain Welsh Revenue Authority appeals, so read the decision letter's own appeal wording rather than assuming.

Northern Ireland has no separate revenue authority for the taxes covered here. HMRC administers everything as it does in Great Britain, the same penalty regimes apply, and appeals go to the same First-tier Tribunal. What differs is domestic rates, administered by Land and Property Services rather than by a council, with their own arrears and enforcement route entirely.

Then there are the penalties that are not tax penalties at all. Companies House late filing penalties for annual accounts sit outside all of this: a separate issuer, a separate appeal service, a rule that you can only appeal once against a penalty notice, and grounds that are far narrower than reasonable excuse. The general discipline holds across all of them — identify the issuing body from the letterhead before you decide where to send the challenge, because applying the wrong timetable to the right argument loses appeals that were winnable.