Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
, see all updates

Debt and return pursuit: PAYE: penalties for late payment: penalty appeals: process overview and time limits

The term ‘appeal’ covers the entire end to end appeal process from receipt of the initial appeal letter to obtaining a tribunal decision. Employers must submit their appeal in writing (a fax is acceptable).

Time limits for each stage of the process

Penalty charged

The employer’s payment record is reviewed and in the absence of any evidence suggesting:

  • reasonable excuse/special circumstance
  • a Time to Pay arrangement being made before the due date

a penalty is calculated and charged. The employer is sent an FPI3 penalty notice.

The employer has 30 calendar days from the date on the FPI3 penalty notice to appeal HMRC’s decision to raise a late-payment penalty.

First stage appeal - providing HMRC’s latest view of the matter

On receipt of the employer’s appeal, a decision maker must review the case to decide whether HMRC’s view of the matter has changed.

See DMBM523680 on decision maker actions for full details on how to deal with the initial appeal letter.

There is no specific deadline to respond to the first stage appeal letter, however, it should be done within operational deadlines.

Note: The employer must have sent their appeal to HMRC and have received their ‘latest view’ before they can proceed to tribunal.

Internal review

If the employer disagrees with the decision maker’s latest view of the matter, they can accept HMRC’s offer of an internal review. An internal review must be conducted by a HMRC officer not previously involved in the case.

Alternatively, while reviewing the case, the decision maker may decide that the case cannot be resolved without an internal review and can write to the employer and offer one.

See DMBM523685 on internal reviewer actions for full details on how to deal with an internal review request.

Once the decision maker has sent HMRC’s latest view, the review time limit begins. The employer has 30 calendar days from the date of the review offer letter to submit their internal review acceptance or go to tribunal.

Where the employer has accepted HMRC’s offer of an internal review, HMRC then has 45 calendar days from the date of the internal review request to conclude the review.


The employer can go to an independent tribunal if they disagree with either the:

  • decision maker’s latest view and they do not want an internal review
  • outcome of the internal review.

Before approaching HM Court and Tribunal Service (HMCTS) the employer must first have sent their appeal to HMRC.

Note: The employer cannot go to tribunal and have an internal review at the same time. Where you are notified of a case that has been received by the Tribunal Service and either:

  • you have not received an appeal
  • there is an internal review ongoing

you should arrange for the tribunal case to be ‘struck out’. For more information see ARTG2440.

See DMBM523690 on tribunal hearings for full details on how to deal with tribunal applications.

The employer must submit a tribunal application within 30 calendar days of either:

  • the date of the letter confirming HMRC’s latest view (where they decide not to take up the review offer and instead go direct to tribunal)
  • the issue of the internal review outcome letter.

On receipt of the application, the Tribunal Service will allocate a tribunal category. HMRC’s deadline for dealing with the application will depend on the category type. For:

  • default paper cases, HMRC has 42 calendar days from the date of the Tribunal Service’s acknowledgement to the employer to prepare and issue a Statement of Case; the employer then has 30 calendar days to reply to the statement of case
  • default basic cases, both HMRC and the employer have up until the hearing date to prepare the case; however, tribunals prefer appellants to have seen HMRC’s case papers (bundle) prior to the hearing - follow the guidance in DMBM523690 on dealing with tribunal applications
  • default standard cases, HMRC have 60 calendar days to prepare and issue a Statement of Case to the appellant and the appellant then has 42 calendar days to provide a list of documents to the tribunal; the Tribunal Service will only set a hearing date after both parties have completed these actions.

Actions following tribunal decision

First tier tribunals are not legally binding. Employers can appeal to upper tier tribunal if they disagree with the first tier outcome but only if they believe a point of law is in question.

For HMRC, Central Policy decide what decisions should be appealed to Upper Tier.

Either party has 56 calendar days from the date of the decision to apply for permission to appeal to Upper Tier.

Late appeals

You do not have to accept appeals sent after 30 days, however, if either:

  • the delay was minimal
  • there was a ‘reasonable excuse’ for not appealing in time and the appeal was brought without unreasonable delay after the excuse had ended
  • a recent event has impacted the original decision to charge a penalty; for example, a change in policy or a tribunal decision made

you should accept the appeal.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If you decide not to accept the appeal (for example, the appeal came in very late and the employer had no reasonable excuse for the delay), issue letter FPI20 (Appeal rejected as out of time). This advises the employer that they can apply to the tribunal to consider their request but if they do, HMRC will oppose the admission of the late appeal. Use the freetext option to explain why you are not willing to accept the appeal.