Appealing Penalties

Can I appeal my HMRC Penalties?

The short answer is yes, you can appeal your HMRC penalties provided you have adequate evidence to support your appeal. The HMRC can raise various penalties including failure to pay/file and failure to notify penalty. If you find yourself in this situation and you’re wondering “How do I fight the HMRC” you have found the right place to help you.  The HMRC leaves ample room for individuals (Self Assessments) and corporations (Corporate tax and VAT returns)  to appeal against a penalty, it is just about understanding the process to make use of it.

Which Penalties can I Appeal?

The good news is that if you have done your due diligence and took reasonable care to have your tax returns done accurately and timeously, it is pretty straightforward. The HMRC will most likely be lenient and reduce your penalty by 100% if you can provide proof. Some of the penalties you can appeal against include:

  • An Inaccurate return from HMRC
  • Late Filing Fee
  • Making tax payment late
  • Failing to Keep Adequate Financial Records

 

This applies to almost all penalties (individual and corporation) that are raised by the HMRC. But what is considered a reasonable excuse?

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Reasonable Excuse to get out of hmrc penalty

We recently posted a blog where we go into a few ways you can reduce your HMRC penalty: How can I reduce my HMRC penalty. A quick summary of what they considered a reasonable excuse is provided below: 

  • Emergency hospitalisation 
  • Death of a loved on (Partner or close relative)
  • Serious or life-threatening illness
  • Computer or software failure while submitting or filing tac returns
  • Service issues with HM Revenue and Customs (HMRC) online services
  • Natural Disaster or unplanned circumstances (Fire, flood or theft prevent)
  • Postal delays that you could not have predicted
  • Delays related to a disability or mental illness you have
  • You were unaware of or misunderstood your legal obligation
  • You relied on someone else to send your return, and they did not

Time Limits on Appealing the HMRC penalty

If you have notified the HMRC that you wish to appeal the penalty, they will send you a letter offering a review. You have two options moving forward, either allow the HMRC to review the penalty and circumstances surrounding it (usually takes around 45 days, but they will inform you if it will take longer) or you can appeal straight to the tax tribunal.

The tax tribunal requires you to inform them of your intention to appeal your penalty within 30 days of the letter of review being delivered to you. The tax tribunal usually takes a lot longer to resolve the appeal. We would also like to draw your attention to the fact that you can request a review from the HMRC, and if you are not happy with the outcome, you can then move on and submit an appeal to the tax tribunal to dispute the outcome of the HMRC.

Penalty Appeal Procedure

Frequently Asked Questions (FAQs)

What is an HMRC penalty appeal?

An HMRC penalty appeal is a formal process where you challenge a penalty issued by HMRC if you believe it was unfair or incorrect.

How do I know if I can appeal a penalty?

You can appeal an HMRC penalty if you believe there was an error, you have a reasonable excuse, or if there are mitigating circumstances. Check the specific guidelines provided by HMRC for detailed criteria.

What is the deadline for appealing an HMRC penalty?

Typically, you have 30 days from the date of the penalty notice to lodge an appeal. It’s important to act quickly to ensure your appeal is considered.

How do I submit an appeal to HMRC?

You can submit an appeal online through the HMRC website, by post, or sometimes over the phone. Ensure you have all necessary documentation and information ready before starting the process.

What information do I need to include in my appeal?

Include your personal details, tax reference number, the penalty notice details, and a clear explanation of why you are appealing. Provide any supporting evidence that backs up your case.

What constitutes a ‘reasonable excuse’ for appealing a penalty?

A reasonable excuse might include serious illness, bereavement, unforeseen events, or an HMRC error. Each case is assessed individually, so provide as much detail as possible.

CIGMA'S SUCCESS RATE WITH HMRC Penalty appeals

CIGMA Accounting is a London based accounting firm with offices in Farringdon and Wimbledon. Our team of accountants have over 16 years of experience and appealing penalties is no exception. Over the last 6 years CIGMA has a 90% success rate in getting penalties reduces or completely removed. 

 

We are so confident that we can help clients reduce their liabilities that we work on a “no win, no fee “policy. If we cannot get your penalty reduced, we will not charge you. If you want to take advantage of this offer you can contact us below:


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA

How you appeal for a penalty is dependent on which type of penalty you are appealing. You can see a list of the required forms to appeal below: 

However, if you prefer submitting appeals by post you can do so using the following forms:

  • For self assessment penalties you are required to complete a SA370
  • Partnership for late return complete form SA371. (Note that only the nominated partner can appeal. 
  • Filing a late VAT return (provided you have a reasonable excuse)
  • Company tax return delayed by technology failure


You can submit these by sending them to the following address:
Self Assessment

HM Revenue and Customs

BX9 1AS

United Kingdom



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Failure to Notify HMRC

Failure to Notify HMRC Penalty

HMRC penalties can be scary, especially when you don’t exactly know what they mean. If you’ve gotten a failure to notify penalty, we’ll help you understand what went wrong, where it went wrong, and what you can do about it at this stage

What is Failure to notify penalty?

Firstly, let’s talk about what a failure to notify penalty is. In certain circumstances you are legally obliged to declare and pay tax the income you’ve received that tax year. These conditions are not limited to individuals, but also to registered companies and partnerships.

Who needs to notify the HMRC that they are liable for tax

Individuals: Required to notify the HMRC that they are liable to pay tax if they meet the following conditions: 

  • Taxable income (PAYE) over £100,000
  • Rental income over £2,500
  • Untaxed income (like tips or commission) over £2500
  • Savings or Investment income over £10,000
  • Your state pension is your only income and exceeded your personal allowance
  • You are a sole proprietor with an income over £1,000
  • You earn international income
  • Claiming child benefit and your (or ex partner’s) income exceeds £50,000
  • You’re a trustee of a trust or a registered pension scheme
Individual penalty failure to notify

Companies: Required to notify the HMRC of being liable to pay tax and VAT if they meet the following conditions: 

 

  • When your company exceeds the VAT registration threshold
  • The VAT supplies you make change
  • Your company is chargeable to tax for an accounting period — if you’ve not been sent a notice to file a tax return, you must tell us within 12 months of the end of the accounting period

Corporations also need to report if they have nothing to pay to the HMRC.

It is always your responsibility to inform the HMRC that you owe them tax, whether you are an individual (PAYE and Sole Traders), or a registered business.

Failure to Notify Time Limits

There are different time limits depending on which tax thresholds you have exceeded. A summary is provided below:

30 Days

  • Your business exceeds the VAT registration threshold (£85,000)
  • The VAT supplies you make change

12 months

  • Company is chargeable to tax for an accounting period

6 Months

  • Profits from self-employment exceeds £1,000
  • No earned income but your investment income first reaches a level that makes you chargeable to tax

 

You will not be charged with a failure to notify if you meet all of the the following conditions: 

 

  • You have a reasonable excuse for the failure
    • Only applicable if you have taken reasonable care to prepare for your tax filing, but due to circumstances outside of your control, you were not able to file your taxes and attempted to file your tax as soon as you could. 
  • The failure was not deliberate 
  • You notified the HMRC as soon as you could after your reasonable excuse ended. 

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Failure to Notify Penalties

Different failure to notify penalties are applicable depending on your circumstances. There are 4 main penalty ranges which include:

  • Non-Deliberate
  • Deliberate
  • Deliberate and Concealed 
  • Prompted or Unprompted

 

The following penalties apply based on the circumstances of your case: 

Reason for failure to notify

Type of disclosure

Penalty

Reasonable excuse

 

No penalty

Not deliberate

Unprompted

0%-30% within 12 months:

after that 10%-30%

Not deliberate

Prompted

0%-30% within 12 months;

after that 20%-30%

Deliberate

Unprompted

20%-70%

Deliberate

Prompted

35%-70%

Deliberate and concealed

Unprompted

30%-100%

Deliberate and concealed

Prompted

50%-100%

 

 
I’ve failed to notify the HMRC, what now?

If you are looking to receive the lowest penalty possible you should follow the following steps: 

 

  1. Reach out to your accountant to discuss steps moving forward
  2. Notify the HMRC either by phoning them or registering online (Just telling them can give up to 30% reduction in your penalty fee) 
  3. Gather as much information (financial records as well as your reasonable excuse information if applicable) as possible of what you failed to notify.  
  4. Assist the HMRC in whatever way you can (assisting them can give you up 40% reduction in your penalty) 
  5. If you want to reduce your penalty even more (Up to 30% , you can give the HMRC access to the information that they request.

 

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.