What counts as a reasonable excuse?

HMRC may accept serious illness, bereavement, fire/flood/theft, postal failures and HMRC system outages. They generally don't accept being too busy, forgetting, ignorance of the rules, or a third party (like an accountant) failing to file on your behalf.

Does interest still apply if I appeal?

Yes. Interest on unpaid tax continues to accrue while an appeal is in progress. Pay the disputed amount or set up Time to Pay if you can — you'll get a refund (with interest) if your appeal succeeds.

Can I get a penalty reduced for cooperation?

Yes. For inaccuracy penalties, the rate is reduced if you make an unprompted disclosure, give full information and pay quickly. Maximum reductions take a careless penalty from 30% down to as little as 0%.

How do I set up Time to Pay?

If you owe £30,000 or less in Self Assessment tax and are within 60 days of the due date, you can usually set up an instalment plan online via your HMRC account, spreading payments over up to 12 months. For larger amounts or other taxes, call HMRC.

Guides

HMRC Penalties and How to Appeal

What penalties HMRC charges for late filing and late payment, the new points-based system, and how to appeal if you have a reasonable excuse.

3 min read·Updated 10 November 2026

Quick answers

What's the penalty for filing Self Assessment late?

£100 immediately for being 1 day late, regardless of whether tax is owed. After 3 months, an extra £10 per day kicks in (capped at £900). At 6 and 12 months, further penalties of £300 or 5% of tax (whichever is higher) apply.

How does the VAT points system work?

Each late VAT return adds a penalty point. Once you reach the threshold (4 points for quarterly filers, 2 for annual, 5 for monthly), a £200 penalty applies when the threshold is reached and for subsequent late returns. Points expire after a sustained period of on-time filing.

Can I appeal an HMRC penalty?

Yes. If you have a 'reasonable excuse' — an unexpected event outside your control that prevented compliance — you can appeal in writing within 30 days of the penalty notice. If HMRC rejects, you can request a statutory review or appeal to the First-tier Tribunal.

HMRC Penalties and Appeals

HMRC charges automatic penalties for missing filing or payment deadlines, and additional penalties for inaccurate returns or careless behaviour.

Self Assessment penalties

When	Penalty
1 day late	£100 fixed penalty
3 months late	£10/day for up to 90 days (max £900)
6 months late	£300 or 5% of tax (whichever higher)
12 months late	Another £300 or 5%

Late payment also attracts:

5% of unpaid tax at 30 days, 6 months and 12 months.
Daily interest at HMRC's official rate (check HMRC’s current rate table).

Points-based system (VAT and MTD ITSA)

VAT and MTD Income Tax have separate penalty rules. HMRC does not apply points for late MTD Income Tax quarterly updates in 2026/27. Check current quarterly-update guidance for transitional rules; this does not waive annual-return or payment obligations.

Each late return = 1 penalty point.
Threshold depends on filing frequency: 5 points (monthly), 4 points (quarterly), 2 points (annual).
Once at threshold, every late return → £200 penalty.
Below the threshold, points generally expire after 24 months. At the threshold, different compliance and outstanding-return conditions apply; see HMRC penalty rules.

Inaccuracy penalties

If your return is wrong, the penalty depends on behaviour:

Behaviour	Penalty range
Reasonable care taken	0%
Careless	0–30% of tax
Deliberate (not concealed)	20–70%
Deliberate and concealed	30–100%

Penalties are reduced for unprompted disclosure and full cooperation.

Reasonable excuse

You can appeal a penalty if you have a reasonable excuse — something unexpected that prevented compliance and was outside your control. Examples that have succeeded:

Serious illness or bereavement.
HMRC system failures.
Postal delays affecting paper returns.
Fire, flood or theft destroying records.

Generally not accepted: forgetting, being too busy, relying on someone else who didn't file, or ignorance of the rules.

How to appeal

Pay the disputed tax (or arrange Time to Pay) — interest still accrues.
Appeal in writing within 30 days of the penalty notice, explaining the reasonable excuse.
If HMRC rejects, request a statutory review or take the case to the First-tier Tribunal.

This is general guidance for the 2025/26 UK tax year and is not personal tax advice. Always check the latest figures on GOV.UK or speak to a qualified accountant for your situation.

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