Appealing a refused MTD for Income Tax exemption

If HMRC refuses your application to be treated as digitally excluded from Making Tax Digital for Income Tax, you can appeal in writing within 30 days of the decision. The right of appeal is in paragraph 16 of Schedule A1 to the Taxes Management Act 1970, and if HMRC will not change its mind the appeal can be taken to the First tier Tribunal.

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What decision are you actually appealing?

The legal test for digital exclusion is in paragraph 14(4) of Schedule A1 to the Taxes Management Act 1970 (TMA 1970). You are digitally excluded if you are a practising member of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records, or if for any reason, including age, disability or location, it is not reasonably practicable for you to use electronic communications or keep electronic records.

The procedure sits in the Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336). Under regulation 19(1), when you tell HMRC you believe you are excluded, HMRC must decide whether it is satisfied and, if it is not, give you notice of that fact. That notice is the decision you appeal. If HMRC is satisfied, regulation 19(4) requires it to issue an exclusion notice, which must state the date you became excluded and, if relevant, the date you stopped being excluded (regulation 19(5)). Regulation 20 also treats you as excluded if you cannot meet HMRC’s identity verification conditions for reasons beyond your control.

How to make the original application is covered in our guide to applying for a digital exclusion. This page picks up after a refusal letter arrives.

Where does the right of appeal come from?

Paragraph 16 of Schedule A1 allows an appeal against any decision made by HMRC under regulations made under that Schedule. The notice of appeal must be given to HMRC within 30 days after the day on which notice of the decision is given, it must be in writing, and it must state the grounds of appeal.

Because section 48(1) TMA 1970 defines an appeal as any appeal under the Taxes Acts, the ordinary appeal machinery in Part 5 of TMA 1970 then applies. That gives you the same three routes as any other direct tax appeal: ask HMRC for a statutory review, accept a review if HMRC offers one, or notify the appeal to the tribunal yourself (section 49A).

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How do you send the appeal to HMRC?

HMRC’s guidance on applying for an exemption says the refusal letter will explain why the application failed and how to appeal. In practice:

Appeal within 30 days of the date on the letter. The statute counts from when notice of the decision is given, but the letter date is the safe deadline to work to.
Write, rather than phone. HMRC asks for the heading “Making Tax Digital for Income Tax” followed by “digitally excluded appeal”. For any other exemption the second part is “exemption appeal”.
Send it to the address on the decision letter and include any new information you want HMRC to consider.
If you need more time, contact Self Assessment general enquiries before the deadline. Agents use the Agent Dedicated Line for Self Assessment.

What should the grounds of appeal say?

The grounds need to deal with the statutory question: is it reasonably practicable for this person to keep digital records and send updates through software? Preference is not enough. HMRC’s guidance states that it will not accept an application where the only reason is that you filed on paper before, are unfamiliar with accounting software, have only a small number of records, or that using the service will take extra time or cost. If the refusal letter puts your case into one of those boxes, the appeal has to show why your position is different.

Useful grounds usually do three things:

Answer the reason given in the refusal letter point by point.
Supply evidence that was missing first time, such as a consultant’s or GP’s letter describing how a condition affects screen use, written confirmation that no fixed or mobile broadband is available at the property, or confirmation of membership of a religious society.
Address the agent question. HMRC’s guidance says that if an agent keeps digital records and submits them through compatible software, the agent can meet the requirements for you, so an exemption may not be needed. If no agent will take on the quarterly cycle, say so and explain why.

Our page on writing grounds of appeal covers structure and tone more generally.

What happens if HMRC still says no?

If you ask for a statutory review, HMRC must tell you its view of the matter within 30 days of receiving your request, or a longer reasonable period (section 49B). The reviewer must then notify the conclusions within 45 days, unless a different period is agreed, and can uphold, vary or cancel the decision (section 49E). If the review is not concluded in time, it is treated as upholding HMRC’s view.

If HMRC offers a review instead, you have 30 days from the date of the offer letter to accept it. If you neither accept nor notify the tribunal within that period, HMRC’s view is treated as settled by agreement under section 54 (section 49C(4)).

After a review, you can notify the appeal to the tribunal within 30 days of the date of the review conclusion letter (section 49G). You can also skip the review and go straight to the tribunal under section 49D, in which case the tribunal decides the matter. The routes are compared in our guide to statutory review and the tax tribunal.

Do you have to use MTD while the appeal is running?

HMRC’s guidance says you should prepare to sign up and use Making Tax Digital for Income Tax in case the appeal is not accepted, and you must keep records as you normally would for Self Assessment. If you had already signed up, HMRC’s guidance on applications says to carry on using the service while you wait.

The start date in any exclusion notice is worth arguing about. Under regulation 18, where an exclusion notice is in place on a day, a digital obligation does not apply if it relates to the tax year in which that day falls. A successful appeal that fixes your exclusion date early in a tax year can therefore remove the obligations for that whole year. Ask for a specific start date in the grounds. If quarterly updates are missed while the dispute runs, see our page on MTD penalty points.

What if the 30 days have already passed?

Section 49 TMA 1970 allows a late appeal if HMRC agrees or, if it does not, the tribunal gives permission. HMRC must agree where you ask in writing, it is satisfied there was a reasonable excuse for missing the deadline, and the request was made without unreasonable delay after the excuse ended. Our page on late appeals to HMRC explains how this works.

There is also a second route. Regulation 19(4) requires HMRC to issue an exclusion notice whenever it is satisfied that a person is excluded, whether or not that person gave notice. Where circumstances have changed since the refusal, for example a condition has worsened, a fresh application with the new evidence may be quicker than a late appeal.

How might an appeal look in practice?

Illustration only. Graham is 81, lets two cottages and lives in a hamlet with no fixed broadband. HMRC refuses his application, saying he could use mobile data or an accountant. His appeal, sent 20 days after the refusal letter, encloses a provider coverage check for his postcode showing no usable signal, a letter from his optician about advanced glaucoma, and a letter from his accountant confirming the firm does not offer a quarterly MTD service. The grounds explain that both location and disability apply, ask HMRC to treat him as excluded from 6 April 2026, and request a statutory review if HMRC does not agree. HMRC may still ask whether another agent could act, so a short note of any other firms approached would strengthen the file.

What mistakes weaken an appeal?

Repeating the original application without answering the refusal reasons.
Relying on cost, inconvenience or unfamiliarity alone, which HMRC’s guidance rules out.
Phoning instead of writing. The statute requires a written notice stating grounds.
Letting a review offer lapse, which turns HMRC’s view into a settled agreement.
Stopping record keeping, or stopping quarterly updates after signing up, while waiting for the outcome.
Forgetting that being exempt only removes the digital obligations. A Self Assessment return is still due, as explained in our guide to Making Tax Digital for Income Tax.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.