Can I appeal a Making Tax Digital penalty?

Yes. You can appeal a Making Tax Digital penalty point or penalty, usually within 30 days of HMRC's letter. Late quarterly updates can earn points from 2027-28, or 2028-29 for the April 2027 group.

Making Tax Digital for Income Tax (MTD) brings a new penalty system, and it comes with the right to disagree. HMRC writes to you each time it gives you a point or a penalty, and that letter tells you how to appeal. The rules below follow GOV.UK as checked on 17 October 2026. For how the points and charges build up, see what the penalties for Making Tax Digital are.

What you can appeal

GOV.UK says HMRC will send you a letter if you get any of these, and that you can appeal if you do not agree:

So you do not have to wait for a £200 charge before you act. In our reading, it is worth challenging a point you think is wrong as soon as the letter arrives, because while you are below 4 points each one stays on your record until 24 months after the missed deadline, and four of them bring a £200 penalty.

Separately, GOV.UK says HMRC may cancel a penalty or a point, or remove all your points, in some exceptional circumstances, such as insolvency.

The 2026-27 relief for quarterly updates

GOV.UK says there are no penalties for missing a quarterly update deadline in the 2026-27 tax year. If you joined MTD in April 2026 and receive a point for a late 2026-27 update, in our reading that is the first thing to raise in your appeal. The relief does not cover a late 2026-27 tax return, which still earns a point, or late payment. At the Budget on 28 October 2026 the government said people who must join in April 2027 will get no penalty points for late 2027-28 quarterly updates either, though the updates must still be sent. For them, the earliest a late update can earn a point is 7 August 2028. This covers quarterly updates only: late tax returns and late payment penalties are unchanged.

If you volunteered for MTD before you had to, the rules differ. GOV.UK says late quarterly updates do not earn points while you are volunteering, but late tax returns do, and the £200 penalty comes at 2 points rather than 4.

What counts as a reasonable excuse

GOV.UK says you need to explain why you disagree, for example because you have a reasonable excuse or think the penalty is wrong. It describes a reasonable excuse as something that stopped you meeting a tax obligation for a valid reason. Its examples include a close relative dying shortly before the deadline, an unexpected stay in hospital, a serious illness, your computer or software failing while you prepared your return, problems with HMRC online services, a fire, flood or theft, being unaware of or misunderstanding your legal obligation, and relying on someone else to send your return when they did not.

GOV.UK says these will not be accepted: a payment that failed because you did not have enough money, finding HMRC's online system too difficult, not getting a reminder from HMRC, and making a mistake on your return. GOV.UK adds that you must send your return or payment as soon as you are able to.

For a fuller look at excuses with trade and landlord examples, see how to appeal a Self Assessment late filing penalty.

What this means for you

Open every HMRC letter about points or penalties and check it against your own dates. A point can be wrong: a 2026-27 quarterly update should not earn one, and you get only one point per deadline even if you have two businesses. Note the date on the letter, because the 30 days usually run from then.

GOV.UK says you will not have to pay a penalty you have appealed until the appeal is settled. If you are struggling to pay the tax itself, contact HMRC as soon as possible; if a payment plan is agreed and you keep to it, late payment penalties are paused from the date you got in touch.

Steps to appeal an MTD penalty or point

1. Find the letter and note the date it was issued. You usually have 30 days from then. If you are late, you will need to give a reason.
2. Check the deadline it refers to against the date you actually sent the update, return or payment, and against the 2026-27 relief, or the 2027-28 relief if you join in April 2027.
3. Write down your reasonable excuse, or why the point or penalty is wrong, with dates and any evidence such as error messages or hospital papers.
4. Follow the instructions on the letter, or use any appeal form that came with it. Without one, send a signed letter to the HMRC office related to your return with your name, your Unique Taxpayer Reference (UTR), the reason and the dates.
5. If HMRC does not change its decision, accept the offer of a review, or ask for one at any time after appealing. Reviews usually take 45 days.
6. If you disagree with the review result, appeal to the tax tribunal, usually within 30 days of the review letter.

The surest way to avoid an appeal is not to miss a deadline. The free MTD check shows when MTD starts for you, and there is more in the trades section and the landlord section.