You can challenge a late payment penalty through the appeals process. Based on the HMRC guidance, here are the key points about challenging late payment penalties:
Grounds for Appeal
You can appeal a late payment penalty on two main grounds:
- Fact – For example, where there was already an agreed time to pay (TTP) arrangement in place for that year
- Reasonable excuse – Where you were prevented by circumstances beyond your control from making the payment on time
What Constitutes Reasonable Excuse
A reasonable excuse is normally something that stopped the customer from meeting a tax obligation on time that they took reasonable care to meet. It might be due to circumstances outside their control or a combination of events.
Examples that might be accepted as reasonable excuse include:
- Serious illness or hospitalization
- Death of a close family member
- Fire, flood, or theft that prevented payment
- Postal delays (with evidence)
- Issues with HMRC online services
What Won’t Usually Be Accepted
- Shortage of funds (unless due to exceptional circumstances outside your control)
- Pressure of work
- Not knowing how much to pay
- Failure by your tax agent
- Lack of reminders from HMRC
Time Limits and Process
An appeal should be in writing and made within 30 days of the issue of the Notice of Liability. However, in practice, to allow for the print and issue of Notices of Liability, 37 days should be allowed from the date the charge is recorded on the taxpayer record.
Important Timing Consideration
A late payment penalty is not imposed until the balancing or final payment for the year is more than 30 days overdue. Therefore, even if there were problems on or around the due date, the customer should have been able to make arrangements to pay before the trigger date for the first late payment penalty.
If you believe you have grounds for appeal, you should submit your appeal in writing to HMRC as soon as possible, explaining your circumstances and providing any supporting evidence.
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