How Can I Appeal Against a VAT Penalty From HMRC?

How can I appeal against a VAT penalty from HMRC?

Dealing with a VAT penalty from HM Revenue & Customs (HMRC) can feel overwhelming, but understanding the process can make it easier. This guide explains the steps to appeal a VAT penalty, including reviews, tribunals, and what to do if you disagree with a tax decision.

What is a VAT penalty?

HMRC may issue a VAT penalty if:

You submit your VAT return late.
You miss a VAT payment deadline.
Your VAT return contains errors.

Penalties vary based on the type of issue and how late or incorrect the submission is. If you think a penalty is wrong or unfair, you have the right to appeal.

How to appeal a VAT penalty

The process to appeal a VAT penalty involves two key steps:

1. Request an HMRC review

When you receive a penalty notice, HMRC will inform you of your right to a review. This review is carried out by someone who wasn’t involved in the original decision. To request a review, you need to:

Respond within 30 days of the penalty notice.
Write to HMRC. The HMRC VAT appeal address will be outlined in your notice.

Your letter should include:

Your name or your business name.
Your reference number (such as your VAT registration number).
Details of the decision you’re appealing and why you believe it’s incorrect.
Any corrected figures or supporting evidence.

2. Escalate to a tax tribunal (if needed)

If you disagree with the review’s outcome, you can take your case to a tax tribunal. This independent body will make a final decision on your appeal.

HMRC VAT appeal process

What happens during a review?

Once HMRC receives your request, they aim to complete the review within 45 days. If it takes longer, they’ll let you know. During this time, they’ll examine your appeal, review the facts, and make a decision.

Possible outcomes include:

Cancelling the penalty if they find it was issued in error.
Upholding the penalty if they believe the decision was correct.

You’ll receive a letter explaining the outcome and next steps.

Taking your appeal to a tribunal

If the review doesn’t resolve the issue, you can appeal to the tax tribunal. You must do this within 30 days of receiving HMRC’s review decision.

The tribunal process involves:

Submitting a notice of appeal with supporting documents.
Presenting your case at a hearing (you can choose a paper-based review if you prefer not to attend).

Tribunals are typically used as a last resort because they can be time-consuming. Many cases are resolved during the initial review process.

Your common questions answered

How do late penalties work?

A late penalty is a fee charged when you don't pay your VAT on time. HMRC can issue these penalties if you miss the payment deadline.

To avoid or challenge this fee, you can file a VAT late payment penalty appeal. This means you ask HMRC to review the penalty, explaining why you think it should be removed or reduced.

You must respond in writing within 30 days of receiving the penalty notice, providing details like your business name, reference number, and reasons for the appeal.

How can I appeal an HMRC penalty?

To appeal an HMRC penalty, you need to submit an HMRC penalty appeal. This involves writing to HMRC explaining why you believe the penalty should be removed or reduced. Make sure to include your business name, reference number, and reasons for your appeal. You must send your appeal within 30 days of receiving the penalty notice.

What is the process for a tax appeals penalty?

When dealing with a tax appeals penalty, you first request a review of the penalty by HMRC. If you're still unhappy with the review decision, you can escalate the appeal to a tribunal. The review process should be completed within 45 days, though it may take longer.

If you don't respond or appeal within 30 days of the review decision, it will be assumed you accept the penalty.

What should I include in my VAT penalty appeal?

When you appeal a VAT penalty, make sure to include:

Your name or your business's name
Your reference number
The decision you disagree with and why you think it’s wrong
Any corrected figures or extra details that support your case

How long does it take for HMRC to review a VAT penalty appeal?

HMRC usually takes up to 45 days to review a VAT penalty appeal. Sometimes, it might take longer, and if so, HMRC will let you know.

What if I'm not happy with the outcome of my VAT penalty review?

If you’re not happy with the review outcome, you can take your appeal to a tribunal.

You need to do this within 30 days of the review decision. If you don’t, HMRC will assume you agree with the review and expect you to pay the penalty.

Can I appeal a VAT penalty if I missed the payment deadline?

Yes, you can appeal a VAT penalty if you miss the payment deadline.

To do this, send a written appeal to HMRC within 30 days of getting the penalty notice, explaining why you think the penalty should be lowered or cancelled.

What happens if I don't respond to a VAT penalty notice?

If you don’t respond to a VAT penalty notice or appeal within 30 days, HMRC will assume you agree with the penalty and expect you to pay it. Your appeal options will be limited if you miss this deadline.

Do you have a question that you can't see? Check out our FAQ page.

Appealing a VAT Penalty