Overview

• HMRC overturned 46,266 late-filing penalties in 2024–25 after introducing a streamlined online appeal under its January 2023 VAT penalty reforms.
• The total number of penalties issued rose to nine million last year from eight million the year before, while only a small fraction of fines are contested.
• Under the Making Tax Digital points-based system, missed deadlines no longer trigger an immediate £100 surcharge and penalties are capped at £200 per return.
• Advocacy groups have called on HMRC to scrap late-filing fines for taxpayers earning below the £12,570 personal allowance after Freedom of Information data showed 600,000 low-income penalties over five years.
• Following a failure to answer 35 percent of calls in early 2024–25, HMRC has boosted customer service staffing and is pursuing further AI-driven digital reforms.