Last updated: 14 October 2026
Can you ask for a review of a VAT surcharge or penalty?
Yes. If HMRC charges you a VAT penalty you think is wrong, you can ask for an independent HMRC review or appeal to the First-tier Tribunal, usually within 30 days of the decision. The old VAT default surcharge was replaced for VAT periods starting on or after 1 January 2023. Late returns now earn penalty points, and late payments attract late payment penalties and interest, but the right to challenge is similar.
What replaced the default surcharge
| Old regime (before 2023) | Current regime |
| Default surcharge of 2% to 15% for late payment | Late payment penalty of 3% at day 15, a further 3% at day 30, then 10% a year |
| Surcharge liability notice for late returns | One point for each late return; a £200 penalty once you reach the threshold |
| Repayment supplement | Repayment interest |
The points threshold depends on how often you file: 2 points for annual returns, 4 for quarterly returns and 5 for monthly returns.
Grounds for a review or appeal
- HMRC’s figures are wrong, for example the payment was on time
- You have a reasonable excuse, such as serious illness, a fire or a failure of HMRC’s systems
- HMRC hasn’t followed its own rules, for example points were added for a nil return that was on time
Lack of money is not usually a reasonable excuse, unless it was caused by something unexpected and outside your control.
How to ask for a review
- Read the penalty notice carefully and note the 30-day deadline
2. Write to HMRC or use the online service, explaining why the penalty is wrong
3. Include evidence, such as bank statements or medical letters
4. If HMRC upholds the penalty, you can appeal to the tribunal within 30 days of the review conclusion
You can also go straight to the tribunal instead of asking for a review.
Example
A café files its quarterly return 10 days late because the owner was in hospital. It receives a penalty point and pays 18 days late, so a 3% penalty applies to the unpaid VAT. The owner asks for a review with hospital letters. HMRC accepts reasonable excuse and cancels the point and penalty, but interest still applies.
Avoid penalties in future
- Pay by direct debit
- Ask for a Time to Pay arrangement before the due date if you can’t pay
- File on time even if you can’t pay
Penalties for errors
Inaccuracy penalties are separate. If HMRC finds a careless error on a return, it can charge up to 30% of the extra VAT, but this is reduced, often to nil, if you tell HMRC about the error yourself before it finds it.
Frequently asked questions
Do penalty points expire?
Yes, usually after 24 months if you stay below the threshold and file on time.
Is interest also charged?
Yes, late payment interest applies from the due date.
Can a surcharge from before 2023 still be appealed?
Only if you are still within the time limit or HMRC agrees to a late appeal.
Can an accountant handle the review?
Yes, with your authorisation.
Related: VAT late filing penalties and struggling to pay VAT.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT penalties and reviews. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
