You Can Appeal an HMRC Penalty When:
You can appeal to HMRC against penalties (and the associated interest on those penalties) in the following situations:
- Where you’ve sent your tax return in late
- Where you’ve paid tax late
- Where you haven’t paid enough tax
- Where you haven’t maintained adequate records to be able to calculate your tax accurately
Appeals must be made within 30 days of the penalty notice being issued. If you do not appeal within this timeframe, it’s at HMRC’s discretion as to whether they will consider the appeal.
If your appeal is successful, your penalty will be cancelled or amended as appropriate.
How to Appeal a Tax Penalty
If HMRC has sent you a penalty letter in the post, the letter will contain an appeal form that you can fill in and return to the relevant department.
If your penalty relates to Self-Assessment, PAYE, VAT or Corporation Tax, there are alternative methods that you can use to appeal. We will discuss the latter three as they’re most relevant to companies.
If you are appealing a penalty that relates to a failed PAYE payment, you should appeal online using HMRC’s PAYE for employers service. There’s a section of the website called “Appeal a Penalty”, you simply need to enter the requested details and your appeal will be submitted immediately. You will also receive an acknowledgement that the appeal has been submitted.
VAT or Corporation Tax
Where your penalty arises because you filed your VAT late or Corporation Tax return late, you can appeal, but only in restricted circumstances. For VAT, you are only allowed to appeal against a penalty for filing your return late if you had a reasonable excuse for the late filing. For Corporation Tax, you are only allowed to appeal if you had computer problems.
You can fill in the appeal form sent with the penalty letter, or you can send a signed letter to HMRC. The letter must contain:
- Your name
- The relevant reference number, for example, VAT registration number or Corporation Tax registration number.
- A comprehensive explanation of why the payment was late with as much detail as possible (including dates)
- Where the late payment or filing arose because of computer problems, you must include detail of when you tried to make the filing or payment and any system error or message that came up at the time (if you have it).
You should send your letter to the HMRC office that deals with your return. Along with:
- your name
- your reference number, for example, your Self Assessment Unique Taxpayer Reference (UTR) or VAT registration number
- a full explanation of why your return or payment was late, including dates
- If you couldn’t file or pay because of computer problems, you should include the date you tried to file or pay online with details of any system error message.
Send your claim to the HMRC office related to your return.
HMRC’s Decision on your Tax Penalty
Whichever way you submit the appeal, HMRC will review the information and decide whether to uphold, amend or withdraw the penalty. They will communicate their decision to you in writing.
If you do not agree with HMRC’s decision to uphold your penalty, you can ask for a review by an independent officer. You can also appeal to the First Tier Tax Tribunal for a review of HMRC’s decision.
How to Avoid Tax Penalties from HMRC
The following points will help you avoid tax penalties from HMRC if you stick to them
- Keep organised, ensure HMRC has correct details for your company and yourself
- Make sure your account is efficient and not missing things
- Respond to HMRC’s communications efficiently, do not put your head in the sand
- Understand your business cash flow situation at all times to ensure you can make upcoming payment deadlines
- If you can’t pay HMRC what they’re owed, let them know and arrange a time to pay plan, or an extension
If you are having problems with tax penalties and surcharges levied by HMRC we may be able to help. Call us on 08000 746 757 for a free of charge, no obligation discussion or use the live chat function on your screen now. We’re always happy to help.