As 20,000 win on appeal, taxpayers are encouraged to challenge automated HMRC penalties

According to recent statistics, HMRC loses over 60% of cases in which taxpayers contest an automated penalty it has assessed

According to the most recent data, taxpayers have won more than 62 percent of appeals against automated fines from HMRC. According to experts, taxpayers who do not challenge automatic penalties may be paying hundreds of pounds needlessly.

According to HMRC's most recent performance data, the taxman only prevailed in 37.8% of the appeals people filed against the automatic penalties they were assessed for filing their returns and paying taxes after the deadline.

Between March 31, 2025, and September 30, 2025, the taxman filed 32,258 appeals against automated penalties. The taxpayer prevailed in 20,076 of these appeals.

HMRC is putting more pressure on taxpayers to make payments now because the deadline for filing self-assessment tax returns is less than ten days away, on January 31.

"Do you still need to pay your self-assessment tax bill? If so, you must make a payment by January 31, 2026, or you may risk having to pay a penalty," the company's most recent warning to taxpayers who had registered for self-assessment stated. A "

In a different piece, we examine how to file a self-assessment tax return.

However, the accounting firm UHY Hacker Young stated: "Unless they believe they are at fault, it is worthwhile for people to appeal any automated fines they receive because taxpayers win so many cases." They are giving the taxi driver unnecessary extra money if they don't. A "

What is the purpose of HMRC's fines?

Every time a self-assessment tax return is filed after the deadline, HMRC automatically imposes a fine of £100. Longer delays result in additional penalties.

In addition, late tax penalties begin at 5 percent of the unpaid amounts and are assessed after 30 days, followed by six and twelve months. In addition, HMRC levies interest on late payments.

Additionally, the taxman automatically levies fines for failing to file or pay company tax and VAT returns on time. If you fail to maintain proper records or submit an incorrect return, HMRC may also impose a penalty.

According to Neela Chuahan, a partner at UHY Hacker Young, it is crucial for individuals to contest the automated fines imposed by HMRC in order to guarantee that any fines are just and precise.

HMRC's systems have the ability to automatically impose penalties, even in cases where individuals have good reasons for missing deadlines.

Chuahan stated: "You have the chance to present evidence and make your case when you file an appeal. You have a good chance of overturning an automatic penalty and winning an appeal against the taxman given HMRC's success rate. The "

If someone has what HMRC considers to be a "reasonable excuse," an automated penalty will be waived.

These include experiencing a computer malfunction during the online return preparation process, problems with the HMRC website, postal delays, experiencing a serious illness or loss, and your tax advisor or accountant failing to submit your return on time.

Data obtained through a Freedom of Information Request was made public by the Tax Policy Associates think tank last summer, revealing that 600,000 individuals over the previous five years were assessed late filing penalties despite not owing any taxes to HMRC.

How to contest a fine from HMRC.

You must give HMRC an explanation if you disagree with a penalty. For instance, if you believe the punishment is unfair or if you have a valid excuse. You may have misinterpreted or been ignorant of your legal obligation.

You typically have 30 days to get in touch with HMRC or file an appeal after the date your penalty was assessed. You must provide an explanation if you fail to meet the deadline.

Depending on whether the penalty is an indirect or direct tax, there are various ways to contest it.

A direct tax is self-assessment. How to appeal a self-assessment penalty is outlined in precise, comprehensive guidelines. However, even if you file an appeal, the official advice is that you should think about paying the fine. You will be required to pay interest on the penalty from the date it was due until the date you paid it if you fail to do so and your appeal is dismissed.

Use the accompanying appeal form or adhere to the guidelines on the penalty letter for any other kind of direct tax penalty (such as income tax or capital gains tax).

Send a signed letter about your return to the HMRC office if you do not have an appeal form. Describe the reasons, along with the dates, for the late return or payment. Add this to your letter as well.

Your name and reference number, such as your Unique Taxpayer Reference (UTR), should be included if computer issues prevented you from filing or making the payment.

BFIA has contacted HMRC for comments regarding the date you attempted to file or make an online payment.