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Penalty appeals

HMRC penalty appeal help

If HMRC has charged you a penalty for a late return, late payment, an inaccuracy or record-keeping, you can usually challenge it, and you normally have 30 days from the date the penalty was issued to appeal (gov.uk/tax-appeals). We assess the grounds, draft the appeal and run it through review and, where needed, tribunal. Correct as at 17 August 2026.

What is the situation?

A penalty notice has arrived and the clock is already running. For Self Assessment, late filing starts at an initial £100, adds daily penalties of £10 a day up to £900 after 3 months, then 5% of the tax due or £300 (whichever is greater) at 6 months and again at 12 months; late payment adds 5% of the unpaid tax at 30 days, 6 months and 12 months, with interest on top (gov.uk, Self Assessment penalties). The percentages compound quietly, which is why penalty notices deserve a decision, not a drawer.

Do you have grounds to appeal?

The main ground is reasonable excuse: something genuinely stopped you meeting the obligation. HMRC's published examples include the death of a partner or close relative shortly before the deadline, an unexpected hospital stay, serious illness, computer or software failure while filing, problems with HMRC's own online services, fire, flood or theft, unpredictable postal delays, and delays related to a disability or mental illness (gov.uk/tax-appeals). Insufficient funds, finding the online system difficult, not receiving a reminder, or a simple mistake will not qualify. A penalty can also be challenged because it is simply wrong: issued for a return that was not due, or calculated on the wrong figures.

What do we do with your penalty?

First we test whether the penalty should exist at all, because cancelling the underlying obligation (for example, where a return was demanded from someone with no need to file) removes the penalty entirely. Then we build the reasonable excuse case with dates and evidence, and file the appeal in the correct form within the 30-day window, or with an explanation for lateness where the window has passed. If HMRC does not concede, we take the offer of a statutory review by an officer not previously involved, and where the review fails and the case merits it, we lodge the appeal with the First-tier Tribunal (gov.uk/tax-appeals).

How does the engagement run?

Most penalty appeals are a fixed, short piece of work: a review of the notice and history, an evidence checklist, a drafted appeal, and the follow-through with HMRC. You will know at the first conversation whether we think the appeal has substance, because filing hopeless appeals helps nobody. Where the penalty is the visible tip of a larger problem, such as several unfiled years, we say so and deal with the underlying position properly; and where paying is the real issue rather than the penalty itself, Time to Pay is often the better tool.

What does it cost to ignore a penalty notice?

Appeal rights lapse. After the 30 days you need a reason for lateness before HMRC will even consider the appeal, and meanwhile the penalty itself falls due within 30 days of the notice, with the escalating late filing and late payment charges continuing to accrue on any outstanding return or tax. A penalty ignored in January is routinely a multiple of itself by the following year.

Who handles penalty appeals?

Call us and a senior manager will take your enquiry personally. Vision Consulting is a London firm of chartered accountants, founded in 2002 and regulated by the ICAEW, with offices at the Gherkin, Cavendish Square and Gants Hill.

Call 020 8554 2135 or email info@visionconsulting.co.uk, with the penalty notice to hand. First conversations are confidential and at no cost.

Frequently asked questions

You usually have 30 days from the date the penalty was issued to contact HMRC or make an appeal. Miss that window and the appeal can still be considered, but only if you give a reason for the delay, which adds a hurdle before the merits are even looked at. For indirect taxes such as VAT, the penalty decision letter offers a review, and you have 30 days to accept that offer or appeal to the tax tribunal. The practical rule is the same in every case: act on the notice in the week it arrives.

Something that genuinely stopped you meeting the obligation. HMRC's published 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 online return, problems with HMRC's own online services, fire, flood or theft, unpredictable postal delays, delays related to a disability or mental illness, and relying on someone else to file who then did not. You must also put things right as soon as you are able to, because an excuse that ended months before you filed weakens the case.

Four things are ruled out in HMRC's own guidance: a bounced cheque or failed payment because you did not have enough money, finding the HMRC online system too difficult to use, not receiving a reminder from HMRC, and making a mistake on the return itself. Insufficient funds is the one that catches most people, because inability to pay is dealt with through a payment plan, not a penalty appeal. If your real problem is cash rather than the penalty, a Time to Pay arrangement is usually the right tool, sometimes alongside an appeal on separate grounds.

An initial £100 penalty applies as soon as the return is late, even if no tax is due or the tax has been paid. After 3 months, daily penalties of £10 a day accrue up to a maximum of £900. After 6 months a further penalty of 5% of the tax due or £300, whichever is greater, is added, and the same again after 12 months. A return that stays unfiled for a year therefore carries at least £1,600 of filing penalties before any late payment charges or interest are counted.

For Self Assessment, 5% of the unpaid tax at 30 days late, another 5% at 6 months and another 5% at 12 months, with interest charged on the outstanding amount throughout. These sit on top of any late filing penalties, which is how a modest liability becomes a substantial debt within a year. A reasonable excuse appeal can remove the penalties where the grounds are genuine, and a payment plan agreed with HMRC addresses the underlying debt. The two routes solve different problems and are often run together.

HMRC considers the appeal and either cancels the penalty, amends it or maintains its decision. If you disagree with the outcome you will be offered a statutory review by an HMRC officer not previously involved in the case, and you can request a review at any time after appealing without waiting for the appeal result. If the review upholds the penalty, the next step is an appeal to the First-tier Tribunal. Reviews are usually quicker than tribunal proceedings, and it may be possible to delay payment of the disputed amount while the appeal or review is in progress.

This is general information, not advice. Your position depends on your circumstances. Speak to us before acting.