If you receive a VAT penalty you should always accept the Taxman’s offer of an internal review into the penalty decision, as recent statistics show 56% of penalty and other decisions reviewed by HMRC are eventually overturned.

To accept the offer of a review, you must reply to HMRC in writing within 30 days of the date of the penalty notice. You can present evidence with the acceptance form of anything that may support your position, such as your reasonable excuse for submitting the form late, or whatever was the cause of the penalty. If you need advice on what to send to HMRC to get the review process moving, please ask one of our VAT experts.

How to appeal an indirect tax decision

http://www.hmrc.gov.uk/complaints-appeals/how-to-appeal/indirect-tax.htm