How we removed £170,000 in HMRC penalties from a client’s personal tax account

Our client paid a £750,000 tax bill just after the deadline, believing HMRC would take no further action.

However, much to their surprise, they were hit with £170,000 of late payment penalties, which were only discovered after checking their online tax account.

Having moved heaven and earth to pay the £750,000, they were left with nothing to cover the HMRC penalties. This left our client vulnerable to insolvency and in danger of losing their family home, which has been used as collateral.

This case highlights the importance of speaking to a financial expert as soon as possible, as the wrong resolution might be worse than the actual problem.

A £170,000 bill our client couldn’t pay

For the tax years 2021/22 to 2023/24, our client filed self-assessment tax returns late because of difficulties with their health and financial circumstances.

The outstanding tax and interest owed from the tax returns amounted to c.£750,000, which was paid in full to HMRC shortly after filing, at the end of January 2026.

Our client believed that once the tax returns had been filed and payment of the tax and interest had been made, their tax position would be up to date and there would be no further action.

However, shortly after filing the tax returns, our client discovered that they had been charged late filing and late payment penalties totalling c.£170,000.

Our client did not receive penalty notices in the post and only became aware of the penalties when they checked their online personal tax account after filing the tax returns.

Why a Time-To-Pay arrangement was the wrong answer

To pay the outstanding tax and interest due on each of the late tax returns, our client remortgaged their house and spent every penny of their financial reserves.

This left them with nothing available to pay the c.£170,000 of penalties, putting the client at risk of insolvency and of losing their family home and assets.

When our client first approached us, he had been advised to negotiate a Time-To-Pay arrangement with HMRC for the c.£170,000 of penalties.

Based on our client’s expected income, the proposed term length and our experience of negotiating payment arrangements with HMRC, we concluded that HMRC would likely reject a payment plan.

Failing to negotiate a Time-To-Pay arrangement would have likely resulted in enforcement action from HMRC and possible insolvency.

As the arrears related solely to penalties, we advised our client that the best initial course of action would be to appeal the penalties.

If an appeal was successful, this would negate the need for a payment plan.

Building the appeal

The client’s online account only provided a summary of the penalties without any detail, so our first action was to contact HMRC to request a Self-Assessment Statement. This would reveal a full breakdown of charges.

Once this statement was received, we could see which penalties had been charged for each tax year and the date on which they were charged.

While we established that an appeal would be late, we could defend this based on the facts available.

We gathered further contextual information from our client to establish the reasons why they were unable to file the tax returns on time.

Although there was not the documentation to support the grounds that we were aiming for, there was still a benefit in appealing, particularly given the risk of insolvency.   

Within a month of sending HMRC the late appeals and further representations, HMRC accepted our client’s appeals and removed the entirety of the c.£170,000 in late filing and late payment penalties from their personal tax account.

Why is proactive financial advice so important?

This is a great example of why it is best to approach a qualified professional as soon as you are aware that you may have a tax issue.

Our client approached us believing that a Time-To-Pay arrangement for the c.£170,000 was the only option available to avoid insolvency. However, they ended up with a resolution that removed the debt altogether.

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email info@intaxltd.com.

inTAX is a specialist tax disputes firm. We deal with disclosures, investigations, and tax enquiries of all descriptions, including COP9, fraud investigations, VAT fraud, tax avoidance, let property disclosures and tribunal appeals. However, we don’t just deal with the serious end of tax investigations; we are also happy to handle smaller enquiries, disputes and problems that can be equally as worrying for our clients.