HMRC cancelled a record 48,189 tax penalties in 2025/26, the highest number in six years.

The figures, according to recent analysis, show 65% of penalties challenged by taxpayers were cancelled, relating primarily to automatic fines for late filing and late payment, including the £100 charge for missing the self assessment deadline.

This marks a 4% rise on the 46,266 penalties overturned in 2024/25, and a 75% increase since 2020/21, when just 5,499 penalties were cancelled during the pandemic.

Separate figures on HMRC’s statutory reviews, which cover more complex disputes, also show a rising number of decisions being revised. HMRC cancelled or amended 926 substantive decisions in 2025/26, up 35% from 688 the previous year, while the proportion of reviews upholding HMRC’s original decision fell from 73% to 67%.

Price Bailey highlighted a case of a taxpayer who faced £1,600 in automated late filing penalties after HMRC’s online system suggested the filing was complete, with follow-up emails diverted to a junk folder. The tribunal overturned the penalties, ruling that easily missed automated communications do not count as effective notice.

Andrew Park, tax investigations partner at Price Bailey, said: “Because these are high-volume, automatically generated fines, they lack human oversight at the point of issuance. HMRC’s independent internal reviewers act as an essential quality control layer, providing a more nuanced assessment before cases escalate to tribunal.”

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