How to appeal
HMRC special reduction: reducing a penalty for special circumstances
Even where there is no full reasonable excuse, a penalty can sometimes be reduced for 'special circumstances' - a separate, often-overlooked route.
What special reduction is
HMRC has the power to reduce a penalty because of special circumstances - something uncommon or exceptional about your situation that makes the standard penalty disproportionate. It is separate from the reasonable-excuse test.
How it differs from reasonable excuse
- Reasonable excuse can cancel a penalty entirely; special reduction reduces it.
- Special circumstances must be genuinely out of the ordinary - not simply an ability-to-pay issue.
- A tribunal can substitute its own view if HMRC's decision on special circumstances was flawed.
Last reviewed September 2026. General information, not tax advice - check your penalty notice and GOV.UK for your exact figures.
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