You can appeal most HMRC penalties if you have a reasonable excuse for the failure that led to the penalty, or if you believe HMRC has made an error. You have 30 days from the date on the penalty notice to lodge an appeal. Acting quickly and providing clear evidence gives you the best chance of having the penalty cancelled or reduced.
Can you appeal an HMRC penalty?
Most penalties issued by HMRC are subject to a right of appeal. This includes penalties for late filing, late payment, inaccuracies in returns, and failure to notify HMRC of a tax liability. Penalties for deliberate fraud are more difficult to appeal successfully.
You can also appeal if HMRC has made a procedural error, such as issuing a penalty for a return that was filed on time.
What is a reasonable excuse?
A reasonable excuse is a serious or unexpected event that genuinely prevented you from meeting a tax obligation. HMRC judges each case on its own facts. Examples that HMRC has accepted as reasonable excuses include:
- A serious or life-threatening illness affecting you or a close family member close to the deadline
- The death of a close relative shortly before the deadline
- A fire, flood, or theft that destroyed your records
- Unexpected hospitalisation
- A failure in HMRC's own online systems that prevented you from filing
- Severe mental health difficulties that affected your ability to manage your affairs
The excuse must be the direct cause of the failure to file or pay. If you recovered from an illness in time to meet the deadline but still did not do so, the illness may not be accepted.
What is not a reasonable excuse
HMRC does not accept the following as reasonable excuses:
- Relying on an accountant or agent who failed to file on your behalf (though you may have a separate claim against them)
- Not having enough money to pay the tax
- Forgetting the deadline
- Being unaware that you needed to file a return
- Being busy at work
Step 1: Internal appeal to HMRC
The first step is to contact HMRC and ask them to review the penalty. You can do this by writing a letter or using HMRC's online portal. Your appeal should:
- State which penalty you are appealing and the date of the penalty notice
- Explain clearly why you believe the penalty should be cancelled
- Include supporting evidence, such as medical letters, death certificates, or correspondence confirming HMRC system failures
HMRC aims to respond to appeals within 45 days. If HMRC upholds the penalty, you can request a statutory review or go directly to the tribunal.
Step 2: Statutory review
If HMRC does not cancel the penalty following your initial appeal, you can request a statutory review. This is a formal process where an HMRC officer not involved in the original decision reviews the case. A statutory review typically takes 45 days. You must request this within 30 days of HMRC's decision on your initial appeal.
If the statutory review also upholds the penalty, you have 30 days to appeal to the First-tier Tribunal.
Step 3: First-tier Tribunal
The First-tier Tribunal (Tax) is an independent body that hears disputes between HMRC and taxpayers. It operates outside HMRC and can overturn HMRC's decisions. Hearings are usually conducted by a judge and a technical member, and the process is more formal than an HMRC internal review.
Taxpayers can represent themselves at the tribunal, but professional representation significantly improves outcomes in complex cases. There is no fee for straightforward appeals, but costs can arise in more complex hearings.
How long does the appeals process take?
An internal HMRC appeal typically resolves within 45 to 90 days. A statutory review takes up to 45 days. If the matter proceeds to tribunal, waiting times can extend to 12 months or more depending on the complexity of the case and the tribunal's current caseload.
Getting professional help
For straightforward appeals, such as a first-time late filing where you have clear evidence of a reasonable excuse, you may be able to manage the process yourself. For more complex cases, especially those involving inaccuracy penalties or large sums, engaging a tax adviser significantly improves your chances of a successful outcome. A qualified tax adviser can prepare your case, communicate with HMRC, and represent you at tribunal if necessary.