Thousands fined - even those who paid on time.

The Inland Revenue said this week that a record 747,000 self-assessment taxpayers had been fined as a result of missing the 31 January filing deadline, a rise of around 100,000 on each of the first two years of the regime. 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 was first revealed by AccountancyAge.com. A Revenue spokeswoman said 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 fines. The spokeswoman said the problem was not a result of systems or human error but was down to processing of returns. ‘We will be identifying those people who have been sent a notice incorrectly,’ she said. When returns arrive at tax offices they are supposed to be logged with the date, even if they are to be processed later. But, in some cases, staff failed to log the date when adding returns to the system. When information was added later, the computer assigned late dates, meaning a penalty was automatically initiated. The introduction of self-assessment enabled the Revenue to cut staff from 58,500 five years ago to around 51,000. The increase in the number of taxpayers missing the deadline came despite a relaxation in rules that give taxpayers an effective one-day extension to the 31 January deadline. 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.’ E-filing discount, page 2.