Taxpayers have won more than 62% of appeals against automated fines from HMRC according to the latest data. Experts have said taxpayers who do not fight automatic penalties are potentially forking out hundreds of pounds unnecessarily.
HMRC’s most recent performance data showed the taxman won just 37.8% of the appeals people lodged against the automatic penalties they received for the late filing of returns and payment of tax.
There were 32,258 appeals against automated penalties from the taxman lodged in the six months between 31 March and 30 September 2025. Of these the taxpayer won 20,076 appeals.
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With the self-assessment tax return filing deadline looming less than 10 days away on 31 January, HMRC is ramping up pressure on taxpayers to pay now.
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Its latest communication to taxpayers signed up for self-assessment warned: “Do you still need to pay your self-assessment tax bill? If so, you must make a payment by 31 January 2026 – or you may risk having to pay a penalty.”
We look at how to file a self-assessment tax return in a separate article.
However, accountancy firm UHY Hacker Young said: “The fact taxpayers win so many cases means that it's worth people appealing any automated fines they receive unless they feel they are in the wrong. If they do not, they are unnecessarily giving extra money to the taxman.”
Why does HMRC issue fines?
HMRC issues an automatic fine of £100 whenever someone files a self-assessment tax return late. Additional penalties are charged the longer the delay goes on.
Furthermore, penalties for the late payment of tax start at 5% of the unpaid amounts and are issued at 30 days late, then at six and 12 months. HMRC also charges interest on late payments.
The taxman also issues automatic fines when either VAT and company tax returns are not filed or not paid on time. HMRC may also issue a penalty if you send an inaccurate return or fail to keep adequate records.
Neela Chuahan, partner at UHY Hacker Young, said it is important for people to challenge the automated fines levied by HMRC to ensure that any penalties issued are fair and accurate.
HMRC’s systems can trigger penalties automatically, even when people have valid reasons for missing deadlines.
Chuahan said: “When you appeal you have the opportunity to provide evidence and argue your case. Given HMRC’s success rate, you are more likely than not to win an appeal against the taxman and overturn an automatic penalty.”.
HMRC will waive an automated penalty if someone has what it believes to be a “reasonable excuse”.
These include suffering a computer failure while preparing an online return, issues with the HMRC website, postal delays, having a life-threatening illness or bereavement, and your tax adviser or accountant failing to send in your return on time.
Last summer, the Tax Policy Associates think tank released data, obtained under a Freedom of Information Request, which showed that 600,000 people over the last five years were hit with late filing penalties, even though they owed no taxes to HMRC.
How to appeal an HMRC fine
If you disagree with a penalty, you’ll need to explain why to HMRC. For example, if you have a reasonable excuse or you think the penalty is wrong. This can include you were unaware of or misunderstood your legal obligation.
You usually have 30 days from the date your penalty was issued to contact HMRC or make an appeal. If you miss the deadline, you’ll need to give a reason.
There are different ways to challenge the penalty, depending on whether it’s direct or indirect tax.
Self-assessment is a direct tax. There is specific, detailed guidance on how you can appeal a self-assessment penalty. However the official guidance is that you should consider paying the penalty even if you appeal. If you do not, and your appeal is rejected, you’ll have to pay interest on the penalty from the date it was due to the date you paid it.
For any other type of direct tax penalty (for example income tax or capital gains tax), follow the instructions on the penalty letter or use the appeal form that came with it.
If you do not have an appeal form, send a signed letter to the HMRC office related to your return. Explain why your return or payment was late, including dates. Also include in your letter:
- your name
- your reference number – for example your Unique Taxpayer Reference (UTR)
If you could not file or pay because of computer problems, you should include the following:
- the date you tried to file or pay online
- details of any system error message
MoneyWeek has approached HMRC for comment.
