The penalty process: Issuing the penalty - Explanatory letters
When you notify a penalty you should send the appropriate form to the taxpayer together with a letter which explains the reason for issuing the penalty.
The letter should also refer to the legal provision under which you are issuing the penalty. If the person to whom you have issued the penalty understands fully the reason for the penalty, it is less likely they will appeal.
Equally, if a person does decide to appeal, we should already have explained the basis on which the penalty was issued.
The explanatory letter should also explain the taxpayer’s right to an internal review by a separate review officer within HMRC, or they can appeal directly to an independent tribunal within 30 days of our decision or extended time limit.