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HMRC internal manual

Self Assessment Manual

Interest, penalties and surcharge: penalties: appeals against late payment penalties


Customers may appeal against a late payment penalty on the grounds that there was a reasonable excuse for not paying the tax on time.

An insufficiency of funds is not a reasonable excuse for failing to pay on time unless attributable to events outside the customer’s control.

If the customer had a reasonable excuse for the failure but the excuse has ceased, the customer must remedy the failure without unreasonable delay after the excuse ceased. It follows therefore that payment should have been made promptly once a reasonable excuse ended. Note: Late payment penalties may arise through reallocation of payments, whether clerical or automatic. An example of the latter is where an assessment is increased in an enquiry case and payments made for a later year are automatically reallocated. Where it is clear for which year the payments were intended then reallocate back to that year. But consider the implications, particularly on interest (if the rate of interest is higher than the late payment penalty rate, it may not be in the customer’s best interest to do so). If the payment is reallocated clerically, consider all implications of the move. For example, will it give rise to an interest charge or late payment penalty as a result?

Where you receive information (or an appeal), that the customer has died, see subject ‘Penalties: deceased cases’ (SAM61270). If you receive an appeal for any other reason, see business area ‘Appeals’ (SAM10000 onwards).

The customer has 37 days from the date the penalty was imposed, as shown on the SA record, in which to appeal against a late payment penalty. The statutory appeal period is 30 days from the date of issue of the notice of penalty assessment but a further 7 days is allowed for printing and dispatch of the notice of penalty assessment. Where a late appeal is received, see business area ‘Appeals’.

An appeal received against a particular penalty does not carry forward to a different penalty. This is a separate event and a separate appeal must be made.

Appeals must be recorded on the customer’s record and the penalty charge must be informally stood over. The business area ‘Appeals’ provides further information on how to handle and record appeals.

Advice on the action to take to deal with an appeal is available as a standard process description - see Late Filing Combined Penalty Appeals 2010-2011 onwards - Individuals and Late Filing Combined Penalty Appeals 2010-2011 - Partnerships

Appeals on the grounds of ‘reasonable excuse’

SA370 notes provide guidance to customers on what is likely to be accepted as a valid reasonable excuse. More information about reasonable excuse can be found at SAM10090.

In law, the customer is not required to pay a late payment penalty before an appeal against the assessment of the penalty is determined so you should informally stand over the penalty immediately the appeal is logged. Note: The fact that a penalty is informally stood over will not stop other penalties being automatically charged.

The office dealing with the appeal should consider the appeal critically on the grounds of reasonable excuse as set out in the subject ‘Reasonable excuse’ (SAM10090) and take one of the following actions

  • Allow the appeal
  • Resist the appeal


  • Refer the case to the Debt Management and Banking Interest Review Unit (IRU) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) for advice. Note: This form is to be used for tax years 2010-11 onwards 

HMRC has discretion to reduce a penalty because of special circumstances. This discretion can only be considered if there was no reasonable excuse for the failure to pay on time. You should consider ‘special reduction’ if you decide not to allow the appeal. For guidance on ‘special reduction’, see CH63400.


1. Consideration of an appeal against late payment penalties should be based solely on the existence or otherwise of a reasonable excuse. Resource factors and cost effectiveness are not valid factors in this consideration and must not be taken into account
2. Particular care will need to be taken when dealing with an appeal against a late payment penalty where the underlying tax is unpaid
3. Where an appeal is received and payment (of the tax) has not been made
  • For those cases involving a time to pay (TTP) arrangement

For cases where the underlying tax is in dispute, where reasonable excuse is claimed or the appeal has been made for other reasons, consider the grounds for appeal following SAM10090

Note: For appealpurposes, if the underlying tax has been included in the customers tax code for collection, the appeal can be dealt with without waiting for the tax to have been collected through the tax code