Appealing HMRC penalties
How to challenge an HMRC penalty if you believe it shouldn't apply, and the test of reasonable excuse.
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Can an HMRC penalty be appealed?
Most can — late filing, late payment, and inaccuracy penalties all carry appeal rights, normally exercised in writing within 30 days of the penalty notice. Interest, by contrast, generally cannot be appealed away: it falls only if the underlying tax or penalty falls.
The 30 days is the hard constraint. A strong case filed late starts weak; a decent case filed on time keeps every option open.
The reasonable excuse test
The standard is an unexpected event that prevented compliance despite you taking reasonable care — serious illness at the critical time, bereavement, fire or flood, a genuine failure of HMRC's own systems. The excuse must cover the period of default, and you must have put things right promptly once it passed.
What fails: pressure of work, forgetting, finding the rules difficult, having no money (for filing), and — usually — relying on someone else, including an accountant. The bar is real events, evidenced, with dates.
How the process runs
Appeal in writing to HMRC first, stating the penalty, the grounds, and the evidence. If HMRC rejects it, you can request an independent statutory review — a fresh pair of HMRC eyes, free, and worth taking — and after that, or instead, notify the appeal to the First-tier Tribunal, which is independent of HMRC.
Most penalty disputes resolve at the review stage. Tribunals are genuinely accessible for straightforward reasonable-excuse cases, but by then the file needs to be tidy: chronology, evidence, and a position taken early and held consistently.
Special reduction and suspension
Two lesser-known routes: HMRC can reduce a penalty for 'special circumstances' — rare, but it exists and can be requested — and careless inaccuracy penalties can be suspended for up to two years against conditions, disappearing entirely if the conditions are met.
Suspension is routinely under-requested. If a careless-error penalty lands and the underlying weakness is fixable — better records, a bookkeeping process — asking for suspension is often the highest-value paragraph in the appeal letter.
Frequently asked questions
Is illness a reasonable excuse?
Serious illness affecting you at the relevant time, evidenced, generally yes — particularly hospitalisation or conditions that genuinely prevented you dealing with affairs. A routine ailment during the same period generally no. The illness must map onto the period of default.
My accountant missed the deadline. Can I appeal on that basis?
Usually not — the obligation is yours, and reliance on an agent is generally excluded as an excuse. Exceptions exist where you did everything right and the failure was truly outside your control. Appeal anyway if the facts are strong, but expect the higher bar.
Does appealing pause the payment?
You can ask HMRC to postpone collection of the disputed amount while the appeal runs, and for penalties this is normally agreed. Interest still accrues on any tax that turns out to be due, so postponement is about cash flow, not cost.
What does a tribunal appeal cost?
No fee to notify a penalty appeal to the First-tier Tribunal, and straightforward cases are often decided on the papers. The real cost is preparation. For a £100 penalty it is rarely proportionate; for stacked penalties or behaviour findings, it can be.