Can you appeal Welsh Revenue Authority LTT interest and penalties before a penalty notice is issued?

Introduction

Readers often search for this issue after receiving correspondence from the Welsh Revenue Authority about Land Transaction Tax (LTT), especially where tax, penalties and interest are all being discussed at the same time. The position can be confusing because not every amount charged by the Welsh Revenue Authority is appealable in the same way, and timing matters.

The key point is that a taxpayer may be able to ask for a review of an LTT tax decision, and may later be able to challenge a penalty decision, but late payment interest is treated differently. It is also important to understand that if no penalty notice has yet been issued, there may not yet be an appealable penalty decision at all.

The Question

A taxpayer contacted the Welsh Revenue Authority to challenge LTT-related charges. The authority replied saying:

• it needed to know whether the taxpayer wanted an internal review by the Welsh Revenue Authority or an appeal to the tribunal;
• no penalty notice had yet been issued, so there was not yet an appealable penalty decision;
• the authority could either review the tax decision now and deal with the penalty later, or issue the penalty notice and then review both together; and
• late payment interest was statutory, not appealable, and could not be mitigated.

The practical question is: what is the best next step?

Nick’s Explanation

Nick’s view, in substance, is that the taxpayer should separate out the three different issues: the tax decision, any penalty decision, and the interest.

In anonymised form, his reasoning can be summarised like this:

“You need to identify exactly what decision has actually been made. If the Welsh Revenue Authority has made a tax decision, that can usually be reviewed. If no penalty notice has yet been issued, there is not yet a penalty decision to appeal. Interest is different again, because the legislation treats it as a statutory consequence of late payment rather than a discretionary decision.”

He would also be right to focus on procedure. If the taxpayer tries to appeal everything at once before the penalty notice exists, part of the challenge may be premature. In most cases, the cleaner route is either:

• to ask the Welsh Revenue Authority to review the tax decision now, then deal with the penalty once formally issued; or
• if timing is sensible and the authority is willing, wait for the penalty notice so that both the tax decision and penalty can be reviewed together.

Nick’s explanation also points toward an important substantive issue. If the taxpayer’s argument is that the dwelling was not suitable for use as a dwelling at the effective date of the transaction, that argument has become harder to run successfully. The threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Law

LTT in Wales is governed principally by the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017, with collection, review and appeal procedure governed by the Tax Collection and Management (Wales) Act 2016.

For present purposes, the main procedural provisions are these:

• Tax Collection and Management (Wales) Act 2016, s157 deals with interest on unpaid tax.
• Tax Collection and Management (Wales) Act 2016, s172 identifies what counts as an appealable decision.

Where tax is paid late, interest is charged under statute. The Welsh Revenue Authority does not need a separate discretionary basis for imposing it. That is why interest is commonly described as compensatory rather than penal. It compensates the public revenue for being kept out of money that should have been paid earlier.

By contrast, a penalty usually depends on a specific penalty notice or penalty decision. Until that notice exists, there is often nothing yet capable of review or appeal as a penalty matter.

If the underlying dispute concerns whether higher residential rates applied, or whether a building counted as a dwelling suitable for use as a dwelling, the substantive LTT analysis may depend on the state of the property at the effective date of the transaction. On that issue, the courts have recently taken a stricter approach. In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

Step one is to identify the existing decision.

If the Welsh Revenue Authority has already concluded that additional LTT is due, that tax assessment or tax decision may be reviewable now. The taxpayer should check the letter carefully and identify the date and nature of the decision.

Step two is to identify whether a penalty notice has actually been issued.

On the facts given, the authority expressly said that no penalty notice had yet been issued. If that is right, there is no appealable penalty decision yet. A taxpayer cannot usually appeal a penalty that has not formally been imposed.

Step three is to treat interest separately.

The authority’s position on interest is legally orthodox. Under s157 TCMA 2016, late payment interest arises by statute. Section 172 TCMA 2016 limits what counts as an appealable decision, and the authority says interest falls outside that category. In practical terms, that means a taxpayer usually cannot appeal interest as if it were a free-standing discretionary penalty.

That does not mean the amount of interest is always beyond scrutiny. If the underlying tax is reduced or cancelled, the interest position may also change because interest depends on the amount and period of unpaid tax. But there is generally no separate power to waive statutory interest simply because the result feels harsh.

Step four is to decide on procedure.

There are two realistic routes:

• ask for a review of the tax decision immediately, while reserving the right to challenge the penalty once the penalty notice is issued; or
• ask the authority to issue the penalty notice first, so that the tax and penalty can be reviewed together.

Which route is better depends on timing and limitation issues. If a deadline for seeking review of the tax decision is already running, it is usually safer not to wait. In that situation, the taxpayer should protect their position by requesting a review of the tax decision now.

Step five is to consider the strength of the substantive argument.

If the taxpayer’s case depends on saying the property was uninhabitable or not suitable for use as a dwelling, the recent case law matters a great deal. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is relatively high. Serious disrepair, missing items, inconvenience, or the need for renovation may not be enough. The condition must be such that the building genuinely fails the legal standard for suitability as a dwelling at the effective date.

That means any review request should be evidence-led. Photographs, survey evidence, contractor reports, completion documents and contemporaneous records will matter far more than general assertions.

Outcome

The practical conclusion is usually as follows:

• the taxpayer can likely seek a review of the LTT tax decision now, if that decision has already been made;
• the taxpayer cannot usually appeal the penalty yet if no penalty notice has been issued;
• late payment interest is generally not separately appealable because it arises statutorily under s157 TCMA 2016; and
• if the underlying argument is based on the property being uninhabitable, the taxpayer should proceed carefully because Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 sets a relatively demanding threshold.

So, in most cases, the best course is to protect the review position on the tax decision now rather than waiting, unless the timing clearly allows both tax and penalty to be dealt with together without risk.

Practical Steps

1. Read the Welsh Revenue Authority letter closely and identify each separate decision: tax, penalty, and interest.
2. Check whether a formal penalty notice has actually been issued. If not, note that there is probably no appealable penalty decision yet.
3. Check the deadline for requesting a review of the tax decision. Do not let that deadline expire while waiting for a penalty notice.
4. If necessary, write to the Welsh Revenue Authority confirming that you want a review of the tax decision now.
5. If you also want to challenge a penalty, say that you will address that once the penalty notice is issued, unless the authority prefers to issue it first and review both matters together.
6. Do not spend time arguing that late payment interest should simply be waived on fairness grounds. Focus instead on whether the underlying tax decision is wrong, because that is the route that may reduce the interest.
7. If your case depends on the property being not suitable for use as a dwelling, gather strong contemporaneous evidence and assess it against the stricter approach in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
8. Keep copies of all correspondence and make sure any review request clearly states the decision being challenged and the reasons why.

Conclusion

Where the Welsh Revenue Authority has not yet issued a penalty notice, the taxpayer will usually need to separate the tax dispute from the penalty issue. A review of the tax decision may be available now, but the penalty challenge may need to wait until a formal notice is issued. Late payment interest is generally statutory and not separately appealable. If the case turns on whether the property was uninhabitable, the current legal threshold is relatively high after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Tax Collection and Management (Wales) Act 2016, s157
• Tax Collection and Management (Wales) Act 2016, s172
• Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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