Thousands are being urged to challenge automated fines from HMRC after new figures revealed the taxman loses the majority of cases when penalties are appealed.
Latest official data shows taxpayers won more than 62% of appeals against automated HMRC penalties, meaning tens of thousands of people have successfully overturned fines for late filing or late payment.
In the six months between March 31 and September 30 2025, a total of 32,258 appeals were lodged against automatic penalties issued by HMRC. Of those, 20,076 were won by taxpayers, leaving HMRC victorious in just 37.8% of cases.
Experts warn that the figures suggest many people who fail to appeal could be handing over hundreds of pounds unnecessarily.
With the self-assessment deadline of January 31, 2026, now less than ten days away, HMRC has stepped up warnings to millions of taxpayers to pay up on time.
In a recent message sent to those signed up for self-assessment, HMRC said: “Do you still need to pay your self-assessment tax bill? If so, you must make a payment by January 31, 2026 – or you may risk having to pay a penalty.”
But accountants say the automated nature of HMRC’s systems means penalties can be triggered even when taxpayers have a valid excuse.
Accountancy firm UHY Hacker Young said the scale of successful appeals shows it is worth challenging fines in most cases.
The firm said: “The fact taxpayers win so many cases means that it’s worth people appealing any automated fines they receive unless they feel they are in the wrong. If they do not, they are unnecessarily giving extra money to the taxman.”
Why HMRC issues automatic fines
HMRC automatically issues a £100 penalty if a self-assessment tax return is filed late, even if there is no tax to pay. Additional penalties apply the longer the delay continues.
Late payment penalties start at 5% of the unpaid tax, charged after 30 days, and are repeated at six and 12 months. Interest is also added.
Automatic penalties are also issued for late VAT and corporation tax returns, late payments, inaccurate returns, or failures to keep adequate records.
Neela Chuahan, partner at UHY Hacker Young, said taxpayers should not assume HMRC’s penalties are always correct.
She said: “When you appeal you have the opportunity to provide evidence and argue your case. Given HMRC’s success rate, you are more likely than not to win an appeal against the taxman and overturn an automatic penalty.”
HMRC will cancel a penalty where it accepts the taxpayer has a “reasonable excuse”. This can include computer failures, problems with the HMRC website, postal delays, serious illness, bereavement, or an adviser failing to submit a return on time.
Concerns about the system are not new. Last summer, the Tax Policy Associates think tank revealed, through a Freedom of Information request, that 600,000 people over the past five years had been hit with late filing penalties despite owing no tax at all.
How to appeal an HMRC penalty
Taxpayers usually have 30 days from the date of a penalty notice to appeal. Those who miss the deadline must explain why.
Appeals can be made online, using the form included with the penalty letter, or by writing to HMRC. Taxpayers must explain why they believe the penalty is wrong or why they had a reasonable excuse.
HMRC’s guidance advises people to pay the penalty even if they appeal, as interest will be charged if the appeal fails and the fine remains unpaid.