Can you appeal a penalty you have already paid

Yes. Paying an HMRC penalty does not stop you appealing against it, and HMRC’s own Self Assessment guidance suggests you consider paying while you appeal. The normal time limit still applies, usually 30 days from the date the penalty was issued, and if the appeal succeeds HMRC repays the penalty, generally with interest, unless it sets the money against other tax you owe.

Does paying a penalty mean you have accepted it?

No. Your right of appeal comes from the legislation that charges the penalty, not from whether the money is still outstanding. Paragraph 16 of Schedule 24 to the Finance Act 2007 (inaccuracy penalties) and paragraph 21 of Schedule 55 to the Finance Act 2009 (late filing penalties) both say an appeal is treated like an appeal against an assessment to the tax concerned, but not so as to require you to pay the penalty before the appeal is determined. Payment is optional while the appeal runs; it is not a condition of appealing, and nothing in those provisions treats paying as giving up the appeal.

HMRC’s guidance on appealing a Self Assessment penalty for late filing or late payment goes further. It says you should consider paying the penalty if you appeal, because if you do not and the appeal is rejected you will pay interest on the penalty from the date it was due to the date you paid it. It adds that if HMRC agrees your appeal, it will repay what you paid with interest from the date you paid it, if you have no other tax outstanding.

Why would you pay first?

There are three common reasons.

• Interest. As HMRC’s guidance says, unpaid penalties carry interest if the appeal fails. Paying stops that cost running. See interest on HMRC penalties.
• Collection. A paid penalty will not be chased. Under GOV.UK guidance on delaying payment, if you have appealed against a direct tax penalty you will not have to pay until the appeal is settled, but people often pay before they realise this, or before they decide to appeal at all.
• Clean records. Some businesses prefer not to carry a disputed balance, for example during a sale, a lending application or a licence renewal.

So paying first is a legitimate choice and costs you nothing in terms of appeal rights.

What time limit applies if you have already paid?

The same limit as for an unpaid penalty. GOV.UK says you usually have 30 days from the date your penalty was issued to contact HMRC or make an appeal, and that if you miss the deadline you will need to give a reason. For indirect tax penalties such as VAT, HMRC offers a review in the penalty decision letter and you have 30 days to accept it or appeal to the tribunal.

The date you paid has no effect on the deadline. A common error is to pay a penalty, then months later decide it was wrong and assume the payment date restarts the clock. It does not.

What if the 30 days have passed?

You can still ask to make a late appeal. Section 49 of the Taxes Management Act 1970 allows notice of appeal after the time limit if HMRC agrees or, if HMRC does not, the tribunal gives permission. HMRC must agree if you make a written request, it is satisfied there was a reasonable excuse for not appealing in time, and the request was made without unreasonable delay after the excuse ended. Our guide to late appeals covers how the tribunal weighs a refusal.

Having paid promptly can help the narrative of a late appeal: it shows you were engaging with HMRC rather than ignoring it. It is not, however, an excuse for missing the deadline in itself.

Do not expect another route if the late appeal fails. Overpayment relief under Schedule 1AB to the Taxes Management Act 1970 applies where a person has paid an amount by way of income tax or capital gains tax that they believe was not due, so it is not designed for recovering a penalty.

How do you appeal a penalty you have paid?

Use the same route as for any other penalty. For Self Assessment late filing and late payment penalties, HMRC’s guidance offers an online appeal or forms SA370 and SA371 by post, and asks for the date the penalty was issued, the dates you filed and paid, and details of your reasonable excuse. For other direct tax penalties GOV.UK says to follow the instructions on the penalty letter or send a signed letter to the relevant HMRC office.

State in the appeal that the penalty has been paid and give the date and amount. That makes it clear what HMRC has to repay if you succeed and helps it apply interest from the right date. Your grounds are the same as if you had not paid: that no penalty was due, that the amount is wrong, or that you had a reasonable excuse. For inaccuracy penalties, challenges to the behaviour category or the disclosure reductions are explained in appealing an inaccuracy penalty.

If HMRC rejects the appeal, GOV.UK says you will be offered a review and can also take the appeal to the tax tribunal. Paragraph 22 of Schedule 55 lets the tribunal affirm or cancel a decision that a penalty is payable, or substitute a different amount that HMRC had power to charge.

How is the money returned if you win?

HMRC cancels or reduces the penalty and repays the overpaid amount. Its Self Assessment guidance says the repayment carries interest from the date you paid, provided you have no other tax outstanding. Section 102 of the Finance Act 2009 sets the general rule for repayment interest where it is in force for a tax: a repaid amount carries interest at the repayment interest rate, and setting the amount against another sum owed to HMRC counts as repaying it on the date that takes effect.

HMRC’s published interest rate guidance says repayment interest is set at Bank of England base rate minus 1%, with a lower limit of 0.5%. Repayment interest is usually much lower than late payment interest, so paying first only costs you the difference between the two if the appeal succeeds.

If you have other debts with HMRC, expect the refund to be used against them rather than paid to you; see HMRC set off of repayments. If the appeal is decided by the tribunal, our page on getting tax back after winning an appeal explains how HMRC gives effect to the decision.

How might this work in practice?

Illustration only. A landlord receives a Self Assessment late filing penalty and pays it straight away to avoid interest. Two weeks later her adviser points out that she was in hospital from before the filing deadline until after it, with discharge papers to prove it. She appeals online within 30 days of the penalty date, explains the reasonable excuse, says the penalty was paid and gives the payment date. HMRC accepts the appeal, cancels the penalty and repays it with interest from the payment date. Had she waited six months, she would have needed to show a reasonable excuse for the delay as well.

What mistakes do people make?

• Thinking payment closes the matter and missing the 30 day window.
• Thinking you must pay before you can appeal. For direct tax penalties you need not.
• Appealing without mentioning the payment, which can slow down the refund.
• Expecting a cash refund when other HMRC debts are outstanding.
• Assuming the same pay first rules apply to disputed VAT. For VAT, the tax itself usually has to be paid before the tribunal hears an appeal, but GOV.UK says that for a penalty HMRC will not ask you to pay it while a review or tribunal appeal is unresolved.

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Related Accountapedia entries

• How to appeal an HMRC inaccuracy penalty
• How to appeal a discovery assessment
• Appealing a Companies House late filing penalty
• How to appeal an HMRC closure notice
• Offsetting tax already paid in IR35 cases

Sources

• legislation.gov.uk: Act 2007 c. 11, schedule 24
• legislation.gov.uk: Act 2009 c. 10, schedule 55
• GOV.UK: Check when to appeal a self assessment penalty for late filing or late
• GOV.UK: Delay payment
• GOV.UK: Penalty
• legislation.gov.uk: Act 1970 c. 9, section 49
• legislation.gov.uk: Act 1970 c. 9, schedule 1AB
• legislation.gov.uk: Act 2009 c. 10, schedule 55
• legislation.gov.uk: Act 2009 c. 10, section 102
• GOV.UK: Rates and allowances hmrc interest rates

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.