Self-Assessment Simplified: How to Appeal Late Filing & Payment Penalties

If you’ve been issued a penalty notice by HMRC following your Self Assessment, there’s a chance you can appeal this penalty. This could result in the fine being delayed, reduced or even cancelled altogether.

To help you figure out if it’s worthwhile appealing, we’re here to simplify Self Assessment late filing fees and payment penalties and outline the steps you should take.

Why you received a penalty

The first step is to figure out why you received a late penalty. The reason will be detailed on your penalty notice from HMRC and could be one of the following:

• Late submission of your Self Assessment tax return
• Late payment of tax owed
• “Failure to notify” - HMRC deems you eligible to file a tax return, but you haven’t submitted one

The deadlines for Self Assessment tax returns depend on whether you’re filing them on paper or online. Paper tax returns must be received on or before 31st October of the current year (e.g. 2022), while online forms can be filed on or before 31st January of the following year (e.g. 2023).

When it comes to payment deadlines, HMRC states that you must pay all taxes owed by 31st January after the current tax year. For the tax years 2021/22, this would mean all taxes must be paid by 31st January 2023.

What are the different penalties?

HMRC has different penalty structures for late filing and late payments. They’re also calculated separately so, if you were late submitting your tax return and late paying your taxes, you would have two separate penalties to pay.

With late filing, how much you owe depends on how far past the submission deadline you are. The current structure is:

• £100 if you submit your tax return 1 day past the due date
• £10/day (maximum of £900) up to 90 days past the due date
• Further 5% of tax owed or £300 (whichever is greater), for delays in filing of up to 6 months
• Further 5% of tax owed or £300 (whichever is greater), for delays in filing of up to 12 months - and in some cases, this may be 100% of the tax owed

With late tax payment penalties, you’ll be required to pay an additional:

• 5% of all taxes within the first 30 days (up to the date the payment is made)
• 5% of all taxes within 6 months (up to the date the payment is made)
• 5% of all taxes within 12 months (up to the date the payment is made)

How to appeal a penalty

If you want to appeal a late filing or late payment penalty, you must file your appeal within 30 days of when the penalty was issued.

You can reach out to HMRC to appeal in the following ways:

• £100 late filing fees can be appealed online (through the Gateway Portal) or by phone
• Late filing and late payment penalties over £100 can be appealed by phone or by post (submitting the HMRC SA370 postal form)

When contacting HMRC, you’ll need to have your Unique Taxpayer Reference (UTR) to hand.

What qualifies as an acceptable reason to appeal

When it comes to appealing penalties, the old ‘my dog ate my form’ excuse isn’t going to cut it.

You need to have a valid reason for what prevented your tax return from being submitted on time in order for HMRC to consider whether to reduce or waive the penalty.

Some possible reasons could include:

• Severe illness that left you hospitalised or incapable of filing your taxes on time
• A family bereavement shortly before the deadline
• Software or computer failure just before or during online tax return submission
• Issues with HMRC online services being unavailable
• Fire, flood or theft that prevented you from submitting your taxes
• Unpredicted postal delays

What doesn’t qualify as an acceptable reason

While the above isn’t an exhaustive list of acceptable reasons, and HMRC will consider your unique situation, it’s important to remember that it’s your personal responsibility to ensure your tax returns and payments are submitted on time.

Here are some examples of reasons that wouldn’t be deemed acceptable by HMRC:

• A third party/person you asked to complete your tax return on your behalf didn’t do it
• Your payment was declined due to insufficient funds in your bank account
• You couldn't figure out how to use the HMRC website
• You didn’t receive a Self Assessment reminder or form from HMRC
• Your tax return form had a mistake
• Your online Gateway Portal access code didn’t arrive in time despite you registering to file online before the deadline

How you will receive your appeal outcomes

How you receive your appeal outcome and the next steps will depend on how you contact HMRC.

For phone enquiries:

• If your appeal is accepted and HMRC agree to cancel the penalty, they will notify you on the phone. If you’ve paid the penalty while you appealed, HMRC will refund the full amount with interest from the date it was paid - that is, unless you have other outstanding balances with HMRC
• If your appeal isn’t accepted, they’ll notify you over the phone and ask you to appeal in writing so they can further evaluate it. HMRC will then contact you via post with a final decision on your appeal

For online and postal enquiries:

• Accepted appeals will be confirmed by post and HMRC will cancel the penalty owed. As with phone enquiries, HMRC will repay the full amount plus interest if you’ve paid your fine while appealing
• Rejected appeals will be confirmed by post, outlining the reason they weren’t accepted, along with the next steps if you want to submit a further appeal against this decision to the Finance and Tax Tribunal. If your appeal isn’t accepted, you will have to pay the fine in full with applicable interest

What if you can’t pay?

If you’re not in a position to pay your fines, it’s important to act fast.

Asking for help from qualified accountants is a sensible place to start, as they can help you get a better handle on your finances and outline the next steps - such as making a hardship application to HMRC or filing an appeal to the Tax Tribunal.