The Inland Revenue has launched an investigation into why its computer system is wrongly issuing £100 fines to taxpayers who have submitted their self-assessment returns on time.
Apparently caused by computer glitches at local tax offices which handle both individual and corporate self-assessment returns, the Revenue is churning out penalty notices for taxpayers who in fact met the 31 January filing deadline.
Angry tax practitioners, relieved that the pressure of filing self-assessment returns by 31 January was over for another year, are now faced with having to chase local tax offices to ensure their clients are not fined without due cause.
“Early indications suggest that this is our mistake, for which we greatly apologise. We are also exploring the possibility of IT problems. We are investigating the cause as a matter of urgency,” a spokeswoman said.
BDO Stoy Hayward tax partner Mark Lee said the problem was causing “needless concern and worry” among clients.
Practitioners are being forced to contact clients to explain they will not be fined after all. Some have warned that if the problem continues, clients may increasingly mistrust their accountants and could even drop their tax advisers.
Another difficulty practices face is recovering the cost of time spent on ensuring the Revenue will not impose the fine.
While the Revenue is unlikely to offer compensation for accountants’ time being used to reassure clients, it has pledged the phantom penalty notices will not be imposed.
“Where it is clear that a tax return was received on time, there is no question of anyone paying a fine. The penalty notice will be cancelled straight away,” the spokeswoman added.
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
Barclays has partnered with accounting software company Xero to provide businesses with access to transaction data through its direct feed.
Government's estimate of a £400m admin saving from Making Tax Digital is way off - and is instead a huge cost burden, warns Lamont Pridmore chief executive Graham Lamont
Xero unveiled its expanded global partner programme at Xerocon South, the accounting technology conference in Australasia