How to Appeal a Tax Decision or Penalty

How to Appeal a Tax Decision or Penalty

If HMRC has issued you a tax bill, penalty, or decision you believe is wrong, you have the right to challenge it. You usually have 30 days to act, and you can request a review by HMRC or appeal to an independent tribunal. Most disputes are resolved without needing to go to tribunal.

What you can challenge

You can challenge HMRC decisions about:

• Penalties (for example, for filing or paying your tax late)
• Your tax bill (Income Tax, Corporation Tax, VAT, or other taxes)
• A claim for tax relief that has been refused
• A request for information or to inspect your business records

If you wish, you can appoint an accountant or tax agent to deal with HMRC on your behalf. You may also be able to delay paying the disputed amount until the matter is resolved.

Time limits for appealing

You usually have 30 days from the date of the decision letter or penalty notice to appeal or request a review. This deadline is strict, and if you miss it, you'll need to provide a reasonable excuse for the delay.

A reasonable excuse is something that prevented you from meeting the deadline despite taking reasonable care. Examples include serious illness, bereavement, unexpected hospital stays, or major system failures that prevented you from filing or paying on time.

Direct tax vs indirect tax

The appeals process differs depending on the type of tax:

Direct tax includes:

• Income Tax (including PAYE)
• Corporation Tax
• Capital Gains Tax
• National Insurance contributions
• Inheritance Tax

Indirect tax includes:

• VAT
• Excise Duty
• Customs Duty
• Environmental taxes such as Plastic Packaging Tax, Landfill Tax, and the Climate Change Levy

How to appeal a direct tax decision

Your decision letter will explain how to appeal. You can either use the appeal form included with the letter or write to HMRC at the address shown.

In your appeal, you must explain what you disagree with and why. You should include:

• Your name or business name
• Your reference number (such as your Unique Taxpayer Reference)
• Any additional information or evidence HMRC may have missed
• What you believe the correct figures are and how you calculated them

After you send your appeal, the caseworker who made the original decision will reconsider your case and aim to reach an agreement with you. Most disagreements are resolved at this stage.

If the caseworker does not change their decision or you cannot reach an agreement, HMRC will offer you a review. You'll then have 30 days to either accept the review or appeal to the tax tribunal. You can also request a review at any time after making your appeal, without waiting for the initial response.

How to appeal an indirect tax decision

For indirect tax matters, HMRC will offer you a review directly in the decision letter. You have 30 days from the date of the offer to either accept the review or appeal to the tax tribunal.

If you want a review but need more time to gather information, you can ask HMRC to extend the deadline. You must make this request within 30 days of the offer date.

If you miss the 30-day deadline entirely, you'll need to ask the tax tribunal to accept a late appeal and provide a reasonable excuse for the delay.

Challenging penalties

HMRC may issue penalties if you:

• Send a tax return late
• Pay your tax late
• Submit an inaccurate return
• Fail to keep adequate records

You have 30 days from the date the penalty was issued to challenge it. You'll need to explain why you disagree—for example, if you have a reasonable excuse or believe the penalty amount is incorrect.

Direct tax penalties (including Self Assessment)

For most direct tax penalties, follow the instructions on the penalty letter or use the appeal form provided.

If you don't have an appeal form, send a signed letter to the relevant HMRC office. Explain why your return or payment was late, including specific dates. Include your name and reference number (such as your Unique Taxpayer Reference).

If computer problems prevented you from filing or paying on time, include the date you tried to file or pay online and details of any system error messages.

After you challenge a penalty, if HMRC does not change their decision, you'll be offered a review. You can also request a review at any time after making your appeal. Alternatively, you may appeal to the tax tribunal, but if you've already requested a review, you'll need to wait for the outcome.

Indirect tax penalties (including VAT)

HMRC will offer you a review in your penalty decision letter. You have 30 days to accept the review or appeal to the tax tribunal.

For late VAT penalties relating to VAT periods starting on or after 1 January 2023, the quickest way to accept a review is through your VAT online account. Alternatively, write to HMRC Solicitor's Office and Legal Services, BX9 1ZT, explaining which penalty you're challenging and why.

For older late VAT penalties (VAT periods starting on or before 31 December 2022), you may have received a "default surcharge" penalty. To challenge this, complete form WT2.

The review process

A statutory review means an HMRC officer from a different team, who was not involved in the original decision, will look at your case afresh. This review officer will consider all the information and make an independent decision.

For direct tax matters, you must appeal to HMRC first before you can request a review. For indirect tax matters, HMRC will offer you a review when they send their decision.

Reviews usually take 45 days, though the review officer will contact you if it will take longer. Reviews are usually quicker than appeals to the tax tribunal.

Appealing to the tax tribunal

If you disagree with the outcome of a review, or if you prefer not to have a review, you can appeal to an independent tax tribunal. The tribunal is completely separate from HMRC and will make an impartial decision on your case.

The tribunal process takes longer than a review, but it provides an independent forum if you cannot reach agreement with HMRC.

Sources

• Disagree with a tax decision or penalty

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.