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HMRC internal manual

PAYE Manual

Employer returns: electronic employer returns: online penalty appeals

General guidance applicable to all types of appeal can be found in Appeals, Reviews and Tribunals Guidance (ARTG).

Any objection to a penalty determination should be treated as an ‘appeal’ whether the employer / contractor calls it an appeal or not.

Right of appeal

The appeal must be made in writing within 30 days from the date of issue of the letter.

If the letter is returned RLS and is re-issued the appeal should be made within 30 days of the date of re-issue. To re-issue an online penalty follow the action outlined at PAYE44045.

Late appeals

You may accept a late appeal if you are satisfied that

  • There is reasonable ‘excuse’ for the appeal being late (PAYE44070)
  • The appeal has been made ‘without unreasonable delay’ after the time limit, that is within days of the time limit or the end of the ‘reasonable excuse’

Grounds for appeal

As the penalties are ‘automatic’ the grounds for a successful appeal are limited and can be summarised as follows

  • There was a reasonable excuse (PAYE44070)
  • The scheme is exempt
  • The calculation of the penalty amount is incorrect
  • The employer has complied

The term ‘reasonable excuse’ is not defined by statute, but broadly speaking a ‘reasonable excuse’ is

  • An unusual event that could not be reasonably foreseen or beyond the person’s control
  • Not prescriptive and must be considered based on the facts of that case

You may be able to make your decision from information given in the letter appealing against the determination but often it will be necessary to obtain the relevant facts before coming to a decision. It will usually be quicker and easier to try to obtain further information by phone or interview.

If, after careful consideration of the excuse, you consider that the appeal should not be allowed because there was no reasonable excuse, you should explain why to the employer and seek the withdrawal of the appeal. You should take care to explain to the employer that he still has the right of appeal to the tribunal against the penalty determination if unable to agree with you.

If the appeal is withdrawn the charge will automatically be restored after you record the end result of the appeal (PAYE44085). Otherwise, the Appeal should be listed for hearing by the tribunal without delay (see ARTG2100 onwards).

Amendment of penalty determinations

Where a Penalty determination is amended or reduced to nil, ECS will issue the appropriate communication through the Central Processing Centre.