If you have received a penalty from Her Majesty’s Revenue and Customs (HMRC), you may be considering whether you have grounds for an appeal. The right to challenge a penalty is an integral part of the UK’s tax administration system. This process allows taxpayers to contest a decision that they believe is incorrect or has been applied unfairly.

Understanding the basis for the penalty, the criteria under which HMRC operates, and the procedural requirements for filing an appeal are critical first steps. Appeals must be lodged within a strict timeframe and should be supported by relevant evidence and a clear explanation of your position. The complexity of tax legislation means that professional advice is often beneficial to effectively navigate the appeal process.

You Can Appeal an HMRC Penalty When:

You can appeal an HMRC penalty when:

  • You believe there has been an error in HMRC’s assessment or application of the penalty.
  • You have a reasonable excuse for not meeting your tax obligations, such as:
    • Serious illness or hospitalization
    • Death of a close family member
    • Unexpected computer or software failure
    • HMRC online service issues
    • Fire, flood, or theft
    • Postal delays
    • Disability or mental illness
    • Unawareness of or misunderstood legal obligation
    • Reliance on someone else to send your return who did not do so

It is important to act promptly when appealing a penalty. You must submit your appeal within 30 days of receiving the penalty notice. If you miss this deadline, HMRC may decide whether to consider your appeal anyway.

If your appeal is successful, HMRC may rescind or reduce the penalty. To increase your chances of success, provide a detailed and persuasive argument explaining why the penalty is unjustified in your case.

How long do I have to make an appeal to HMRC?

You usually have 30 days from the date of the penalty notice to appeal to HMRC. This is a strict deadline, so it is important to act promptly. If you miss the deadline, you may still be able to appeal, but HMRC will need to be convinced that there was a good reason for the delay.

To appeal a penalty, you should use form SA370. You can download this form from the HMRC website. You will need to provide details of your reasons for appealing and any supporting evidence.

Once you have submitted your appeal, HMRC will consider it and send you a decision within 60 days. If your appeal is successful, HMRC may rescind or reduce the penalty.

If you are not happy with HMRC’s decision, you can appeal to the First-tier Tribunal (FTT). You must submit your FTT appeal within 30 days of receiving HMRC’s decision.

What if I miss the 30-day time limit for appealing?

You should write to HMRC explaining why you missed the deadline and requesting that they consider your appeal anyway. You should provide as much supporting evidence as possible, such as medical records, police reports, or letters from other organizations.

HMRC will then consider your request and decide whether or not to allow your late appeal. If HMRC decides to allow your appeal, they will consider your case and make a decision on whether to rescind or reduce the penalty.

If HMRC refuses to allow your late appeal, you can still appeal to the First-tier Tribunal (FTT). However, the FTT is less likely to consider late appeals than HMRC.

It is important to note that appealing a penalty after the 30-day deadline is more difficult and less likely to be successful. Therefore, it is important to act promptly if you believe that you have grounds to appeal a penalty.

How to Appeal a Tax Penalty

If you have received a penalty letter from HMRC, you can appeal the penalty within 30 days. There are two ways to appeal:

Online

You can appeal online if the penalty relates to VAT, Corporation Tax, or PAYE. To do this, go to the HMRC website and log in to your relevant account:

  • For VAT: Go to the “VAT online services” section and log in to your VAT account.
  • For Corporation Tax: Go to the “Corporation Tax online services” section and log in to your Corporation Tax account.
  • For PAYE: Go to the “PAYE for Employers” section and log in to your PAYE for Employers account.

Once you have logged in, go to the “Appeal a Penalty” section and enter the required details.

By post

You can appeal by post if the penalty relates to Self-Assessment, VAT, Corporation Tax, or PAYE. To do this, fill out the appeal form that came with your penalty letter and return it to HMRC. If you don’t have the appeal form, you can write a letter to HMRC explaining why you are appealing and providing any supporting evidence.

Your appeal should include the following information:

  • Your name
  • Your relevant reference number, such as your VAT registration number, Corporation Tax registration number, or Self-Assessment Unique Taxpayer Reference (UTR)
  • A comprehensive explanation of why the payment was late or the return was filed late, including dates
  • If the late payment or filing arose because of computer problems, you must include details of when you tried to make the filing or payment and any system error or message that came up at the time

HMRC’s Decision on Your Appeal

Once you have submitted your appeal, HMRC will review the information and make a decision. They will communicate their decision to you in writing.

If HMRC upholds the penalty, you can request a review by an independent officer within 30 days. You can also appeal to the First-tier Tribunal (FTT) within 30 days.

Here are some tips for appealing HMRC’s decision to uphold your penalty:

  • Be clear and concise in your request for a review or appeal.
  • State why you disagree with HMRC’s decision and provide any supporting evidence.
  • Be polite and professional.

If you request a review, HMRC will assign an independent officer to review your case. The officer will consider your appeal and make a recommendation to HMRC. HMRC will then make a final decision on your appeal.

If you appeal to the FTT, the FTT will hold a hearing to review your case. The FTT will then make a decision on whether to uphold, amend, or withdraw the penalty.

Need Advice?

If you are having problems with tax penalties and surcharges levied by HMRC, we may be able to help. Call us on 0800 074 6757 for a free-of-charge, no-obligation discussion or use the live chat function on your screen now. We’re always happy to help.

HMRC Appeal FAQs

Yes, for certain penalties, you can appeal online through your Government Gateway account. This is often the case for penalties related to VAT or PAYE. For other types of penalties, you may need to write to HMRC directly or use the appeal form provided with your penalty notice.

Valid grounds for appeal typically include having a reasonable excuse for missing a deadline, such as illness or technical issues beyond your control. You can also appeal if you believe HMRC has made an error, or there has been a misunderstanding regarding your tax affairs

If HMRC rejects your appeal, you can request a review by an HMRC officer not previously involved in your case. Alternatively, you can take your case to the independent tax tribunal, which will require a formal process and may benefit from professional legal advice.

In many cases, you must pay the penalty even if you are appealing it. However, you can request HMRC to hold off on collection until the appeal is resolved. If your appeal is successful, any amount paid will be refunded.

To enhance the likelihood of a successful appeal, provide clear and concise reasons for your appeal, backed by any relevant evidence. Keep records of all communications with HMRC, and consider seeking professional tax advice to strengthen your case.

If you’re unable to pay the penalty, contact HMRC as soon as possible. You may be able to arrange a payment plan. Failing that, contact an insolvency practitioner such as ourselves for expert advice on your options.

When appealing an HMRC penalty, you should include all relevant evidence that supports your case. This may consist of documents, records, or detailed explanations that substantiate your claim of having a reasonable excuse or other grounds for appeal. You can attach this evidence to your written appeal or upload it through the online service if applicable. Ensure copies are clear and legible, and retain the originals for your records.

A ‘reasonable excuse’ is a term used by HMRC to describe an unexpected or unusual event that is outside of your control, which has prevented you from meeting your tax obligations. This can include serious illness, unexpected life events, or system failures when trying to file online. Each case is judged on its own merits, and HMRC will consider if you remedied the situation without unreasonable delay after the excuse ended.

If you disagree with HMRC’s decision following your appeal, and also the result of any internal review, you have the right to take the matter to the First-tier Tribunal (Tax). This independent body will consider your case afresh. You can also seek Alternative Dispute Resolution (ADR), which involves a third party helping you and HMRC reach an agreement.

The response time for an HMRC appeal can vary. HMRC aims to acknowledge your appeal within 15 working days and provide a full response as soon as possible. Complex cases may take longer to resolve. If there is a delay, you should receive updates on the progress of your appeal.

You are entitled to seek professional assistance when appealing an HMRC penalty. This can be beneficial in ensuring that your appeal is presented effectively and that you have interpreted the tax rules correctly. Tax advisors or accountants with experience in HMRC disputes can provide valuable guidance and representation.