COM10106 - Appeals: handling appeals and postponements: flat-rate penalty determination appeals, decision maker (Action Guide)
Source: gov.uk (2025-09-25)


This Action Guide for decision makers supplements the action guide at COM10105 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com10105).

When dealing with appeals against flat-rate late-filing penalties, consider the initial action at steps 1 - 4 below and as appropriate steps 5 - 16. The guide is presented as follows.

Initial action (#initial)

Steps 1 - 4

Grounds for appeal correspond with those in ‘reasonable excuse’ guidance (#correspond)

Step 5

Grounds for appeal resemble those in ‘reasonable excuse’ guidance (#resemble)

Step 6

Grounds for appeal are clearly unacceptable (#unacceptable)

Steps 7 - 10

Grounds for appeal seem valid but do not appear in ‘reasonable excuse’ guidance (#Grounds for appeal seem valid but do not appear in ‘reasonable excuse’ guidance)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The return has not been filed but there is no reasonable excuse (#The return has not been filed but there is no reasonable excuse)

Step 12

The return has not been filed and the reasonable excuse is continuing (#continuing)

Step 13

The return has not been filed and the reasonable excuse has ended (#ended)

Step 14

The company fails to respond to your enquiries (#fails)

Step 15

Late appeals (#late)

Step 16

Initial action

1. Is the appeal valid, in writing or made by email from a known and trusted email address and within the time limit? See the Appeals, Reviews and Tribunals Guidance manual at ARTG2120 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2120) onwards.

2. Has the company notified the appeal to the Tribunal? If so, follow the guidance at ARTG2210 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2210) and ARTG8230 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg8230). Immediately refer the case to HMRC Legal Services in accordance with your local arrangements.

3. Has the company asked for a review at the same time as the initial appeal to HMRC? If so, follow the guidance at ARTG2210 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2210). You must explain what your view is. The review time limit begins as soon as you have done that. Immediately refer the case to HMRC Legal Services in accordance with your local arrangements.

4. Consider the grounds for appeal against the reasonable excuses described in the Company Taxation Manual at CTM94140 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm94140) and CTM94150 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm94150), the Enquiry Manual at EM5152 (https://www.gov.uk/hmrc-internal-manuals/enquiry-manual/em5152) and at ARTG2250 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2250).

Where the grounds for appeal:
- correspond with or are very similar to those shown in that guidance go to step 5
- resemble one of the reasonable excuses in that guidance go to step 6
- seem to be valid but do not appear in that guidance go to step 11
- do not fit the reasonable excuse criteria and you wish to resist the appeal go to step 7
You cannot fully consider the appeal until the return is delivered. If the return has not been filed, consider steps 12 - 15.

Grounds for appeal correspond with those in ‘reasonable excuse’ guidance

5. Unless there are grounds for suspecting the excuse to be false, allow the appeal.
- use function PPEN (Prepare Penalty Determination) to reduce the penalty to nil
- issue a letter to the company confirming your decision
- use function NOTE (Case Notes) to record the actions taken, including the grounds for appeal
Top of page (#Top)

Grounds for appeal resemble those in ‘reasonable excuse’ guidance

6. Consider the appeal carefully. If necessary, ask the company for more information or evidence. If after that:
- there is no doubt that the appeal should be allowed follow the action in step 5
- you have reached a clear conclusion that the appeal should be resisted follow the action in steps 7 - 10
- you have any remaining doubts about whether or not the appeal should be allowed follow the action in step 11
If the company fails to provide further information requested, the appeal should be resisted. Follow steps 7 - 10.

Top of page (#Top)

Grounds for appeal are clearly unacceptable

7. Issue a decision maker’s refusal letter CTS156 to the company, with a copy to the agent if applicable, setting out the reasons why you are unable to accept the company’s ‘reasonable excuse’ and suggest that the company reconsider the matter. This letter offers a review and advises the options available to the company.

The CTS156 letter is available on SEES and must be sent to the company, with a copy to the agent, even if the appeal was made by the agent on behalf of their clients.
- where the return is still outstanding ask the company to deliver it
- use function NOTE (Case Notes) to record actions taken
- BF for 60 days.
8. If the company accepts the decision and withdraws the appeal:
- use function HAPP (Handle Appeal) to change the appeal status to ‘Withdrawn’. Doing that releases any stood over penalty charged but currently unpaid for pursuit
- use function NOTE to record actions taken
- write to the company determining the appeal under S54 Taxes Management Act (TMA) 1970
9. If the company accepts the offer of a review and the request for a review is received in the local office, on the day of receipt:
- acknowledge receipt
- immediately forward all papers and/or file to HMRC
- use function NOTE to record actions taken
10. If there is no response in the local office after 60 days, check case notes in function VTPR to see if a request for an internal review or Tribunal has been sent to HMRC.

If so:
- take no further action regarding the penalty
- ensure that the papers or file have been requested by HMRC and have been sent. If not, send the papers directly with a covering note
If not:
- use function HAPP to change the appeal status to ‘by determination’. Doing that releases any stood over penalty charged but currently unpaid for pursuit
- use NOTE to record actions taken
Top of page (#Top)

Grounds for appeal seem valid but do not appear in ‘reasonable excuse’ guidance

11. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Top of page (#Top)

The return has not been filed but there is no reasonable excuse

12. Follow steps 7 - 10.

Top of page (#Top)

The return has not been filed and the reasonable excuse is continuing

Where the grounds for appeal are clearly unacceptable go to step 7, otherwise proceed as below.

13. If the reasonable excuse is continuing:
- advise the company that you cannot fully consider the appeal until the return is delivered
- explain that any reasonable excuse must have existed from the filing date to the day before the return is received
- contact the company again after 30 days to determine if and when the reasonable excuse has come to an end
- repeat the procedure as necessary
If the company fails to respond, follow step 15.

Top of page (#Top)

The return has not been filed and the reasonable excuse has ended

14. Where the grounds for appeal are clearly unacceptable go to step 7.

Otherwise:
- if the reasonable excuse has come to an end, allow the company 14 days to send in the return
- if the company still does not send in the return, ask the company to withdraw the appeal and to send in the return
- if the company does not withdraw the appeal or does not reply, go to step 15
Top of page (#Top)

The company fails to respond to your enquiries

15. If the company fails to provide further information to show that the reasonable excuse is continuing:
- go to steps 7 - 10 and resist the appeal
- consider what other action can be taken to obtain the return, such as a further letter, phone call or asking the Recovery office to make a personal call
Top of page (#Top)

Late appeals

16. If the company writes to HMRC asking for their appeal to be accepted out of time, write to the company accepting the appeal outside the 30 day time limit if you are satisfied that:
- there was a reasonable excuse for not appealing within the time limit, see ARTG2250 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2250)
- the company appealed without unreasonable delay after the excuse ceased
If you do not accept the company’s late appeal, write to the company explaining why and telling them that if they want to take the matter further they should apply to the Tribunal to consider their request. See ARTG8240 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg8240).