Sometimes, being an adult feels like an endless parade of tasks and deadlines that you have to remember. And it can be even worse as a small business owner! Missing an important accounting date, like filing your Self Assessment tax return or paying your tax bill, could mean being hit with a penalty from HMRC.
It’s not all bad news - if you’ve received a Self Assessment penalty and have a reasonable excuse for missing the deadline, you can submit an appeal. Here, we outline the steps you can take if you disagree with a Self Assessment penalty.
What are Self Assessment penalties issued for?
The deadline for submitting your Self Assessment tax return is 31st January for online returns, or 31st October for paper tax returns. HMRC will almost certainly hand out a fixed Self Assessment penalty of £100 if you fail to meet either of these deadlines. The penalty will increase if you submit your return more than three months after the deadline. You can use HMRC’s calculator to estimate how much your penalty will be.
HMRC may also issue a penalty if you miss the deadlines for paying your Self Assessment tax bill or for making payments on account. The amount of the penalty will depend on how late your payment is and how much tax you owe. HMRC’s calculator can estimate the total cost of your penalty and any interest.
What is a reasonable excuse?
If you have received a Self Assessment penalty but you believe you have a reasonable excuse for missing the deadline, you or someone authorised to act on your behalf, may be able to appeal HMRC’s decision.
A reasonable excuse is an issue you can’t reasonably avoid that prevents you from meeting a tax obligation. Examples could include a medical issue, fire or flood damage, bereavement or serious computer failure. HMRC expects you to submit your return and make any payments as soon as the reasonable excuse has been resolved. For example, you would be expected to file your tax return as soon as you are sufficiently recovered from a medical issue.
Issues that HMRC will not accept as reasonable excuses include mistakes on your tax return, failing to pay because of a lack of funds, and not receiving a reminder of the deadline.
Appealing a Self Assessment penalty
Before you appeal a Self Assessment penalty
HMRC will not accept an appeal until the Self Assessment tax return it relates to has been filed. If you have not yet submitted your return, you should do so immediately to minimise the penalty for late filing. HMRC advises that it may help to pay the penalty even if you plan to appeal the decision. By paying the penalty, you avoid any additional interest if your appeal is rejected.
Appeals against Self Assessment penalties should usually be made within 30 days of the penalty being issued. If you wish to make an appeal after this deadline, you should explain the reason for the delay within your appeal.
If you have received a Self Assessment penalty but you no longer need to submit a tax return, the penalty can be cancelled by HMRC. You can notify HMRC that you don’t need to file a tax return through the HMRC website or via their helpline.
Appealing a Self Assessment penalty online
You can appeal against a £100 late submission or late payment penalty online using your Government Gateway account. To submit your appeal, you will need the date the penalty was issued, the date you filed your Self Assessment tax return and the details of your reasonable excuse. Once you have successfully submitted your appeal online, you will see a confirmation message, including when you can expect the result.
Appealing a Self Assessment penalty by post
You can appeal a late submission or late payment penalty by post. If you received your Self Assessment penalty in the post from HMRC, you can follow the instructions in the letter they send and use the enclosed appeal form. Alternatively, you can download and complete the SA370 form and send it to HMRC with a letter outlining the details of your appeal. If you’re in a partnership, the nominated partner should appeal a late tax return for the partnership using form SA371.
If you don’t have an appeal form, you can send a signed letter to HMRC instead. The letter should include the details of your reasonable excuse, the date the penalty was issued, the date you filed your Self Assessment tax return and your Unique Taxpayer Reference (UTR) number. If technical problems prevented you from filing your return or paying your bill on time, you should include the date that you attempted to file or pay and details of the error message you received.
Letters and forms relating to appeals should be sent to:
HM Revenue and Customs
Appealing a Self Assessment penalty by phone
You may also make your appeal over the phone by calling the Self Assessment Helpline on 0300 200 3310 and quoting your UTR number.
Receiving the results of your appeal
If you made your appeal online or by post, HMRC will write to inform you whether your appeal is successful or not. If HMRC agrees with your appeal, the penalty will be cancelled and, if you have already paid the penalty in full, the amount you paid will be refunded to you with interest from the date you made payment.
If HMRC does not agree with your appeal, you will receive a letter explaining why this decision has been made and requesting payment for the penalty, if you have not already paid it. If you disagree with HMRC’s decision, you will be offered a review with an officer from HMRC’s Solicitor’s Office and Legal Services directorate. If the outcome remains unchanged and you still disagree with the decision, you may appeal to the tax tribunal.
If you made your appeal by phone, HMRC will call you to inform you if your appeal is successful and the penalty will be cancelled. If you have already paid the penalty in full, the amount you paid will be refunded to you with interest from the date you made payment. However, if HMRC does not agree with your appeal, you will be asked to submit your appeal again in writing. HMRC will also request that you pay the penalty, if you have not already done so, and any interest that has been added. The written appeal will then be examined and HMRC will inform you of the decision in writing.
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Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.