A judge has warned HM Revenue & Customs (HMRC) that a lateness fine issued automatically by a computer for being late with a tax return is not valid, as it needs a “flesh and blood human being” to issue it.
With just hours left to file a Self Assessment tax return, hundreds of thousands of self-employed workers could breathe a sigh of relief over a recent ruling that such a fine is only legal when imposed by a human employee, not via an automated process.
At a recent tribunal hearing over a fine, Judge Richard Thomas said that the requirement should be for a “flesh and blood human being, who is an officer of HMRC” to make the assessment and decide to impose the penalty. Only at that point can the instruction be given to a computer to execute the fine, which is £100.
In the tribunal case, a small property business had filed its tax return two weeks late but was let off on the grounds that the fine had been automatically issued by a computer. Judge Thomas ruled that the firm had a reasonable excuse for late filing.
Around 800,000 taxpayers miss the 31 January deadline every year but HMRC could now be facing a flood of appeals, which could cost the taxman millions of pounds in lost revenue.
However, a spokesperson for HMRC denied that the case would make any difference, saying that the case had been about whether the firm had a reasonable excuse for late filing.
They went on to say that penalties issued by the tax authority to those who file late are “due and payable”, but added that any taxpayer with a reasonable excuse for filing late should get in touch.