The Revenue also said it had launched an inquiry into how thousands of other taxpayers had received £100 fines even though they had met the filing deadline, as first revealed on AccountancyAge.com last week.
A Revenue spokeswoman said initial estimates that as many as 20,000 innocent taxpayers had been hit were overstated.
The Revenue has now launched an investigation into why its computer system wrongly issued the £100 fines. The spokeswoman said the problem was not a systems or human error but was down to processing of tax returns.
‘We will be identifying those people who have been sent a notice incorrectly,’ she said.
When returns arrive at local tax offices they are supposed to be logged with the date even if they are left to be filled in later.
But returns were added to the system while staff failed to log the date. When information was subsequently added, the computer had assigned late dates meaning a penalty was automatically initiated.
Introduction of self-assessment allowed the Revenue to cut its staff from 58,500 five years ago to nearer 51,000 now.
The increase in taxpayers missing the deadline came despite a relaxation in rules giving taxpayers an effective one-day extension to the 31 January deadline for avoiding the penalty.
Richard Shooter, chairman of the English ICA tax monitoring group, said: ‘It is a situation where compensation should apply. Also, clients can be confused. I am looking for letters of apology to clients and other people. It would make it clear that it is the Revenue’s fault and no penalty will apply.’