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Seeking comment: HMRC overturns record number of tax return fines

Journalist: Aaliyah Ahmed, The Times

ended 19. August 2026

I’m looking for tax and personal finance experts to comment on HMRC overturning a record 48,189 tax penalties following appeals last year, with 65% of appeals successful.

I’m particularly interested in why so many automated penalties are being overturned, whether HMRC’s system is issuing too many fines, and how easy it is for taxpayers to challenge an incorrect penalty.

I’d also like experts to comment on HMRC’s new points-based penalty system and whether this is fairer than automatically issuing fines for missed deadlines.

4 responses from the Newspage community

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Eamonn PrendergastVerified
Chartered Financial Adviser at Palantir Financial Planning Ltd
When 65% of appealed penalties are being overturned, it raises a serious question about whether HMRC is issuing too many penalties in the first place. Automation is necessary when dealing with millions of taxpayers, but individual circumstances don’t always fit neatly into a computer system. The fact that 48,189 penalties were overturned shows why people shouldn’t automatically assume an HMRC fine must be correct. If you believe a penalty is wrong or you have a genuine reasonable excuse, appeal it and provide clear evidence. The points-based system should be fairer because it distinguishes between an occasional mistake and repeated non-compliance. Ultimately, penalties should encourage people to meet their tax obligations, not punish someone unfairly for a one-off error. Human judgement still needs to sit alongside automation.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
A 65% success rate on appeals should make HMRC uncomfortable. Automation is very good at spotting that a deadline was missed; it is far less good at understanding why. If nearly two-thirds of challenged penalties are being overturned, that suggests the system is catching too many people who should never have been fined in the first place.

Taxpayers should not assume an HMRC penalty is automatically correct. You normally have 30 days to appeal, and where there is a genuine reasonable excuse, challenge it rather than simply paying out of fear.

The points-based system is a better direction because one mistake does not immediately become a fine. It distinguishes the occasional slip-up from repeated non-compliance. But HMRC has to make the points visible and easy to correct. A fairer penalty regime is not just about changing the maths; it is about remembering there is a human being behind the tax reference number.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
Could more individuals and accounting firms be using AI to write challenges with relative ease and low cost? I used AI to help me to dispute a traffic infringement. After I queried the matter, I expected them to respond with evidence, but they said the matter had been closed with no further action. The same could be the case with these fines. But, will HMRC ever admit it?
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Harvey DhillonVerified
Founder & CEO at Zmartly
HMRC cancelled 48,189 automated penalties last year, a record. The rate says otherwise. It cancelled 67 per cent of reviews in 2024-25 and 64 per cent in 2025-26, so it is not caving in more easily. It upheld more.

What changed is us. HMRC issued 8.1 million penalties, down from 9.1 million, yet reviews rose from 69,341 to 74,738. A penalty is about a fifth more likely to be challenged than a year ago. People who once just paid are now reading up on the rules and drafting the appeal with AI.

HMRC's own report calls the review service a way to "quickly and efficiently remove those penalties". It knows it issues fines that should not stand, and waits for the taxpayer to say so, however fewer than one in a hundred does. The £100 is charged the moment a return is late, before anyone checks whether tax was owed. It lands hardest on small businesses who crossed a threshold nobody told them about.