Late Filing Penalty Appeals , What Counts As A Reasonable Excuse
- MAZ
- 3 days ago
- 15 min read
Late Filing Penalty Appeals: What Counts as a Reasonable Excuse in the UK
A reasonable excuse for a late Self Assessment filing is not defined in statute, but it must be a genuine reason that a reasonable person, facing the same circumstances, would consider sufficient to justify the failure to file on time. HMRC is legally obliged to cancel a penalty where a valid reasonable excuse exists and the return was filed without unreasonable delay once that excuse ceased.
Getting this right matters. A 2025/26 Self Assessment return filed late enough can attract penalties starting at £100 on day one, building through £10 daily charges for up to 90 days, then two further tiers of £300 or 5% of the tax owed at six and twelve months. A return filed a year late and still unpaid can generate over £1,600 in fixed and percentage penalties before interest is added. None of that is inevitable if the underlying circumstances genuinely justify an appeal.
The Penalty Structure You Are Appealing Against
Under Schedule 55 of the Finance Act 2009, the penalty structure for late Self Assessment filing operates in four layers. The £100 fixed penalty applies from day one of lateness, regardless of how much tax is owed. This applies even if the return shows no tax liability at all, which catches many people who assume there is no consequence to filing late when they have already paid their tax through PAYE or have nothing owing.
From day 91 of lateness (three months after the filing deadline), a daily penalty of £10 per day applies up to a maximum of £900. At the six-month point, a further charge of £300 or 5% of the tax shown as due on the return, whichever is greater, is added. At twelve months, the same £300 or 5% charge applies again. Where HMRC determines that the failure was deliberate, the penalties at the twelve-month stage can escalate to 70% or 100% of the tax, depending on whether the failure was deliberate alone or deliberate and concealed.
For the 2025/26 tax year, the online filing deadline is 31 January 2027 and the paper return deadline was 31 October 2026. Penalties run from the day after those dates respectively. Interest on unpaid tax runs at the Bank of England base rate plus 2.5% from the date payment was due.
What "Reasonable Excuse" Legally Means
The phrase is not defined in the Taxes Management Act 1970 or in Schedule 55, and that absence is deliberate: Parliament intended the question to be assessed on the facts of each case. What the case law has established is a workable framework, and the most authoritative statement of that framework is the four-stage test set out by the Upper Tribunal in Perrin v HMRC [2018] UKUT 156 (TCC).
The Perrin Four-Stage Test
The Upper Tribunal directed that the First-tier Tribunal, when assessing a reasonable excuse appeal, should work through four questions in sequence:
First, what facts does the taxpayer assert give rise to a reasonable excuse? The taxpayer must be clear and specific about what actually happened, not vague or general.
Second, have those facts been established on the balance of probabilities? This is the standard of proof, not beyond reasonable doubt. Evidence, whether documentary or oral, must make it more likely than not that the asserted circumstances occurred.
Third, do those established facts, in law, amount to a reasonable excuse? This is an objective question. The test is not whether the particular taxpayer thought the excuse was reasonable, but whether a reasonable person, having the same information and characteristics as that taxpayer, would have found the circumstances a sufficient reason to fail to comply.
Fourth, if the excuse was established, did it continue until the taxpayer remedied the failure without unreasonable delay? This is the cessation question, and it is the stage where many otherwise strong appeals partially or fully fail. If the circumstance that prevented filing passed, but filing was then not done promptly, the excuse may be found to have ceased before the return was submitted.
The objective nature of the test, confirmed in Perrin and reinforced in subsequent cases, is important to understand. HMRC's own published guidance has described a reasonable excuse as requiring an "unexpected or unusual event," which First-tier Tribunal Judge Ann Redston criticised in the Perrin FTT hearing as too narrow and not the correct legal standard. The correct standard is the objective one described above, which is somewhat broader. An appeal should be framed accordingly, not by reference to HMRC's internal guidance alone.
What Does and Does Not Qualify
Circumstances That Have Succeeded
Death of a close relative or partner shortly before the filing deadline has consistently been accepted. Where the bereavement occurred in the weeks immediately before 31 January and the person responsible for filing was genuinely incapacitated by grief or by the practical demands of dealing with the estate, tribunals have found this reasonable. The closer the bereavement to the deadline and the closer the relationship, the stronger the argument. Death of a distant acquaintance several months before the deadline has not succeeded.
Serious illness or hospital admission is accepted where the illness prevented filing during the period of delay. A hospital admission covering the final weeks of January, supported by discharge paperwork or a GP letter, is one of the clearest categories of accepted excuse. The illness must have directly caused the inability to file: a serious diagnosis followed by surgery and recovery can cover several months of delay. Minor illness, routine medical appointments, or general poor health without acute incapacity have consistently failed.
A genuine technical failure of HMRC's own online services during a filing attempt, supported by screenshots of the error message and ideally cross-referenced to HMRC's own published service status records at the time, is accepted. HMRC maintains a record of system outages, and tribunals treat this evidence seriously. An appeal based solely on an oral assertion that the system did not work, with no contemporaneous evidence, is much weaker.
Fire, flood, or theft of records that made it impossible to complete the return during the period in question has succeeded where the event is documented and the delay in subsequently obtaining replacement information was reasonable. This requires evidence of the event itself and ideally some record of steps taken to recover the position.
Mental illness is a recognised category, but the burden of establishing it in this context is high. The condition must be directly linked to the inability to file, the timeline must be coherent, and medical evidence is essential. A tribunal decision that accepted serious depressive illness as a reasonable excuse typically involves a GP letter or consultant report confirming the condition, its severity, and its effect on the taxpayer's ability to manage their affairs during the relevant period. A general assertion of anxiety or stress, without clinical evidence, will not succeed on its own.
What Consistently Fails
Forgetting the deadline is not a reasonable excuse. The obligation to file is personal and statutory, and HMRC does not accept ignorance of a well-publicised deadline as justification for missing it. Not receiving a reminder from HMRC fails for the same reason: HMRC is not legally required to issue reminders, and the obligation to file does not depend on one.
Not being able to afford an accountant is not accepted. The obligation to file runs to the taxpayer personally, and HMRC's view, upheld consistently by tribunals, is that returns can be completed without professional help using HMRC's own guidance and free online tools.
Being too busy, whether through work pressure, a busy trading period, or a change in personal circumstances such as moving house, does not satisfy the objective test. Tribunals have found repeatedly that a busy period is not an event that prevents a reasonable person from making arrangements to meet a statutory deadline.
Not being aware that registration for Self Assessment was required is generally not accepted, though there is a limited exception where the law was genuinely unclear or ambiguous in its application to the taxpayer's specific situation. A landlord who genuinely did not know they had to register because the rental income threshold was not well known has occasionally succeeded on this basis, but the cases are narrow and fact-specific.
Reliance on an Accountant or Agent: When It Works and When It Does Not
This is one of the most frequently misunderstood areas of reasonable excuse, and the answer depends entirely on what the taxpayer actually did and when.
Where a taxpayer engaged a competent accountant in good time, provided all the required information and documentation before the deadline, and the accountant simply failed to file despite having everything they needed, a tribunal may accept this as a reasonable excuse. The taxpayer's obligation is to take reasonable steps to select a competent adviser and to provide what is needed for the return to be completed. If both of those conditions are met and the failure is clearly the agent's rather than the client's, the appeal has a reasonable prospect of success.
Where the taxpayer delayed providing information to the accountant until the last moment, or where the information was not complete when passed over, the excuse shifts. If the filing failure resulted from the taxpayer's own lateness in providing records, the agent becomes irrelevant to the analysis. The cause of the delay was the taxpayer's own conduct.
There is also the question of selecting a competent adviser. The tribunal decision in Krywald [2024] reinforced the point that reliance on an agent requires the taxpayer to have taken reasonable steps to engage someone competent. Appointing an unqualified individual to handle Self Assessment and then blaming them when the return is not filed is unlikely to succeed. Engaging a regulated accountant, even if that accountant subsequently fails, puts the taxpayer in a considerably stronger position.
One practical implication: where an accountant or agent has failed to file and the taxpayer is facing penalties as a result, the taxpayer should appeal promptly on the reasonable excuse grounds, file the return as soon as possible, and separately pursue the agent for any penalties that cannot ultimately be recovered through the appeal. The adviser's own professional indemnity insurance may be relevant.
How to Appeal: Form SA370, Deadlines, and the Route to Tribunal
The 30-Day Deadline
An appeal against a Self Assessment late filing penalty must be made within 30 days of the date shown on the penalty notice. This is not 30 days from the filing deadline, which confuses some taxpayers. The penalty notice is issued separately by HMRC after the deadline has passed, and the 30-day clock runs from that notice date.
Late appeals can be submitted, but HMRC has discretion to refuse them, and in practice late appeals without a compelling explanation for the delay in appealing are often rejected at the first stage. If a late appeal is refused, the taxpayer must apply to the First-tier Tribunal for permission to make a late appeal, setting out the reason for the delay and the merits of the underlying appeal.
What to Include in the SA370 Appeal
Form SA370 is the standard form for Self Assessment penalty appeals, available online through HMRC's digital services or as a paper form. An appeal submitted online through the Self Assessment account is also accepted.
The appeal must set out the reason for the late filing in clear, specific terms. Generic language such as "I had personal difficulties" or "I was unwell" without detail is unlikely to succeed. The appeal should address each stage of the Perrin test: what circumstances prevented filing, when those circumstances arose, how they directly prevented filing, when they ceased, and what steps were taken to file promptly after they ceased. Supporting evidence should be attached where possible: medical letters, death certificates, screenshots of system errors, correspondence from a hospital.
The return itself must be filed before or at the time of the appeal, or at least promptly after it. HMRC will not process a reasonable excuse appeal where the return has still not been submitted, because one of the conditions is that the excuse covers the period from the deadline to the point at which the failure was remedied.
The Route to Tribunal
If HMRC refuses the appeal, the taxpayer can request an independent internal review by a different HMRC officer. This is a separate stage within HMRC's process and does not involve the tribunal. If that review also concludes against the taxpayer, the next step is the First-tier Tribunal (Tax Chamber), which must be appealed within 30 days of HMRC's review conclusion.
The tribunal considers the case afresh. It is not bound by HMRC's view of what constitutes a reasonable excuse, and it regularly finds in favour of taxpayers on grounds that HMRC had refused to accept. Tribunal hearings can be conducted in person or on paper, and legal representation is not required. A well-organised bundle of evidence and a clear written argument addressing the four Perrin questions gives a self-representing taxpayer a genuine prospect of success where the facts genuinely support the appeal.
Attending the hearing, where one is listed, materially improves outcomes. Tribunals place considerably more weight on oral evidence, where the judge can assess credibility directly, than on written statements alone.
Practical Points That Change the Outcome
The single most important step is to file the return as soon as possible, regardless of whether the appeal has been submitted or resolved. Filing eliminates ongoing daily penalties and demonstrates that the delay has been remedied. It does not waive the right to appeal the penalty for the period of delay that has already elapsed.
Paying the tax owed, or entering into a Time to Pay arrangement with HMRC, is a separate matter from the filing penalty appeal. Late payment interest and surcharges continue to accrue on unpaid tax regardless of the filing penalty appeal. An appeal against the filing penalty does not suspend the obligation to pay the underlying tax.
The evidence assembled at the time of the appeal matters more than most taxpayers appreciate. HMRC officers reviewing SA370 appeals do not have access to the taxpayer's personal history or medical records. A specific, evidenced, chronologically coherent account of what happened will receive more careful consideration than a general statement of hardship. A GP letter dated contemporaneously with the delay period is more persuasive than a retrospective letter explaining historical events from memory.
One aspect of the penalty that many taxpayers do not know about is special relief, available under Schedule 55 paragraph 16 where a penalty would be disproportionate and unjust having regard to the underlying obligation, even where no formal reasonable excuse exists. This is a narrower and less commonly used route, and HMRC applies it restrictively, but it is available and should be considered in unusual cases where the reasonable excuse defence does not quite apply.
Key Takeaways
A reasonable excuse is an objective test, confirmed by the Upper Tribunal in Perrin v HMRC [2018]. The question is whether a reasonable person, in the taxpayer's circumstances, would have found those circumstances a sufficient reason to fail to file on time.
HMRC's own published description of a reasonable excuse as an "unexpected or unusual event" has been criticised by tribunals as too narrow and does not represent the correct legal standard.
Death of a close relative near the deadline, serious illness or hospital admission, a genuine HMRC system failure supported by evidence, and in some cases agent failure where the taxpayer provided all information in good time, are the categories most likely to succeed.
Forgetting the deadline, being too busy, relying on a deadline reminder from HMRC, and financial inability to pay for an accountant are consistently rejected.
The appeal must be made within 30 days of the penalty notice using form SA370. The return must be filed before or very shortly after the appeal. The excuse must cover the full period of delay, and once the circumstances ceased, filing must have occurred without unreasonable delay.
If HMRC refuses the appeal, the route to the First-tier Tribunal remains open, and tribunals regularly take a broader view of reasonable excuse than HMRC does at the initial review stage.
FAQs
Q1: Can mental health challenges count as a reasonable excuse for a late Self Assessment filing, and how do I present this effectively to HMRC?
A1: Well, it's worth noting that in my experience advising clients over the years, mental health issues can absolutely qualify as a reasonable excuse if they were serious enough to prevent you from handling your tax affairs around the deadline. The key is showing it genuinely stopped you from filing and that you acted promptly once you could. For instance, I've had a client in Manchester running a small marketing agency who suffered a severe bout of anxiety and depression following a business setback; she provided a letter from her GP detailing the timeline and how it impaired her concentration. HMRC accepted it because she filed within days of feeling better. Always include medical evidence and explain the direct impact, vague claims rarely succeed.
Q2: What if my accountant let me down and filed late, does that count as a reasonable excuse for me as the business owner?
A2: In my practice, this is a common pitfall, especially for busy self-employed traders. Relying on a third party doesn't usually count as a reasonable excuse on its own, unless that person had their own valid excuse that affected you. You remain responsible. Consider a freelance IT consultant I advised in Birmingham who switched accountants mid-year; the new one missed the deadline due to their own staffing issues. HMRC rejected the initial appeal until we showed the client had chased them repeatedly and filed immediately upon discovering the error. The lesson? Stay on top of your advisor with written confirmations and deadlines.
Q3: How do reasonable excuses apply differently for someone with income from multiple jobs or the gig economy?
A3: Gig economy workers and those with several income streams often face extra complexity because they might not realise they're in Self Assessment. A reasonable excuse might hold if, say, you only discovered the obligation late due to unexpected platform payments. Take a delivery driver in Leeds I helped: he started with two apps mid-tax year and missed registering. Once he realised, he filed straight away with evidence of when the extra income appeared. HMRC cancelled the penalty because the situation was unforeseen and outside his prior experience. Always check your tax code and P60s carefully if juggling jobs.
Q4: Does a family bereavement still work as a reasonable excuse if it happened a few months before the deadline?
A4: It's not just about timing, it's about the ongoing impact. HMRC looks at whether it reasonably prevented you from filing. In one case, a shop owner from Glasgow lost her mother in October, and the emotional fallout, combined with sorting the estate, left her unable to focus until after the January deadline. She provided a timeline and evidence of probate delays. The appeal succeeded because she showed she acted as soon as practicable. If the bereavement's effects linger, document it clearly rather than assuming the date alone suffices.
Q5: What about technical issues with HMRC's online system right before the deadline, will that get my penalty cancelled?
A5: Yes, provided you can prove you tried to file and the problem was on their end. I've seen this save many clients. A high-earning consultant in London attempted submission on 30 January only to find the portal crashing repeatedly. He took screenshots, noted the times, and filed first thing the next morning. HMRC accepted it as a reasonable excuse. My tip: try alternative methods like the app if possible, and gather contemporaneous evidence. Don't wait until the last minute if you suspect issues.
Q6: Can I appeal a late filing penalty for property income if I was waiting for rental statements or agent info?
A6: Waiting for information can sometimes qualify if it's genuinely beyond your control and you chased it actively. Consider a landlord client in Cardiff whose letting agent delayed sending full annual statements due to their own system upgrade. She had emailed reminders and filed as soon as the details arrived. HMRC waived the penalty after reviewing the correspondence. For property owners, keep a clear audit trail of requests, this turns a potential rejection into a success.
Q7: How does a reasonable excuse work if I'm dealing with a serious illness that started before the deadline but continued afterwards?
A7: The excuse must cover the entire period of delay, and you need to show you filed without unreasonable delay once recovered. A teacher from Newcastle I advised had chemotherapy starting in December; she was too unwell through January and February. With hospital records and a clear statement that she submitted the return two weeks after her treatment break allowed it, the appeal was successful. Partial excuses rarely work, be honest about the full timeline.
Q8: Are there any regional differences, like in Scotland, that affect reasonable excuse appeals for late filing?
A8: The core rules are UK-wide under HMRC, but Scottish taxpayers with additional rates or reliefs sometimes face unique documentation needs. One Edinburgh-based professional with Scottish Income Tax complications had records affected by a house move. We successfully argued the combination of relocation stress and needing specific Scottish tax data as a reasonable excuse. Always mention any devolved tax elements if relevant, as they can add weight to complexity arguments.
Q9: What happens if I have a reasonable excuse but receive multiple escalating penalties, can one appeal cover them all?
A9: You can appeal the whole lot if the excuse covers the period, but address each penalty clearly. In my experience, a client with a prolonged hospital stay after an accident had initial £100, daily, and 6-month penalties. We submitted one comprehensive appeal with medical timeline covering all stages, and HMRC cancelled everything. File the return first, then appeal promptly within 30 days of each notice for best results.
Q10: If my appeal is rejected, what are the next steps and when might it be worth going further?
A10: If HMRC turns you down, you can request a review or appeal to the independent Tax Tribunal. I've had cases where initial rejections were overturned at tribunal, particularly with strong evidence like in a case of a self-employed plumber whose records were destroyed in a flood. Tribunals take a broader view of "reasonable" than HMRC sometimes does. Weigh the penalty size against costs, but don't be afraid to escalate if your facts are solid and documented. Always keep records of all communications.
About the Author
Maz Zaheer, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants, (Registered with Companies House) two premier UK tax advisory firms. With over 15 years of expertise in UK taxation, Maz provides authoritative guidance to individuals, SMEs, and corporations on complex tax issues. As a Tax Accountant and an accomplished tax writer, he is renowned for breaking down intricate tax concepts into clear, accessible content. His insights equip UK taxpayers with the knowledge and confidence to manage their financial obligations effectively.
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