How to Appeal a Self-Assessment Tax Penalty

by | Jan 5, 2022

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Have you received a self-assessment tax penalty from HMRC and have reasonable grounds for an appeal? In this post we’ll provide guidance on how to appeal your tax penalty.

(Note: If you're a TaxDash user and you opt to pay the amounts outstanding instead of appealing, you can pay the penalties using the payment details as reflected on your TaxDash account).

A taxpayer may appeal a tax penalty when they are able to prove that they have a reasonable excuse for tax compliance failure. No appeal is possible unless they have a valid excuse.

A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet. You should state in your own words what your reasonable excuse is for not filing the tax return on time.

Here’s a list of what may be considered a reasonable excuse:

  • Your partner or another close relative passed away shortly before the tax return or payment deadline
  • You had an unexpected hospital stay that meant you couldn’t meet your obligations
  • You suffered from a serious or life-threatening illness
  • You were not aware that any personal tax returns was outstanding for previous years ( which means you have not received any post from HMRC about this before, maybe HMRC had your wrong address), but be aware that HMRC do keep track of letters posted and to which address.
  • The software you use to complete your returns failed just before the deadline, despite you taking reasonable care to maintain it
  • HMRC suffered its own technical problems – for example, the Self-Assessment portal went down
  • You suffered a relevant fire, flood, or theft
  • You have a disability that prevented you from meeting your obligations

All outstanding tax returns should be filed with HMRC before you can appeal the penalty. You have 30 days from receiving the penalty notice to write to HMRC and appeal the penalty.

What to write in your letter of appeal

The letter of appeal should clearly state the following:

  • Taxpayer name and tax reference number(UTR)
  • It should clearly state all the tax year’s penalties you are appealing
  • Ideally it should be obvious that you took corrective action to get the outstanding returns filed as soon as you became aware that they were outstanding (so there should not be a long gap between receiving the penalties and filing the tax return).
  • If it took a long time, then you need to explain why, e.g. could not get hold of information. but do remember that you get 9 months to submit a tax return after the tax year ends.  

In the final part of the letter you need to indicate that you have taken action to ensure that this will not happen again i.e. you have appointed an accountant to help you make sure you don’t miss deadlines again. You can conclude your letter by asking HMRC in the nicest possible way if they can review and cancel the penalties on this occasion.

It is best to call HMRC to confirm if you should pay the penalty amount due as per your HMRC account, should you opt to appeal the penalty.

Lastly, make sure your letter is dated and signed and do make sure you keep a copy of the letter. It is always best to post the appeal letter via registered post to HMRC, to have proof that you have posted it.