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.
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), every further late return costs £200. 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 (around 7.75%).
Points-based system (VAT and MTD ITSA)
Replaces the old default surcharge for VAT (and applies to MTD ITSA from 2026).
- Each late return = 1 penalty point.
- Threshold depends on filing frequency: 4 points (monthly), 4 points (quarterly), 2 points (annual).
- Once at threshold, every late return → £200 penalty.
- Points expire after a period of full compliance (24 months for quarterly).
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.
Frequently asked questions
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