HMRC bungle again

The tax department has been caught out by yet another bungle in its penalty letter dispatching system.
HMRC moved swiftly this morning to apologise for sending 12,000 penalty notices to people who have been taken out of the Self Assessment (SA) process.
An HMRC spokesman said: “We have identified that nearly 12,000 people have been sent a Self Assessment daily penalty letter in error. We are very sorry and can reassure these customers that we know who they are and that this letter is incorrect - they do not owe a penalty. We are writing to all of them to apologise and to explain this error.
“The 12,000 customers are among the 130,000 who we have already taken out of Self Assessment, following a cleanse of the database and our invitation to customers to contact us if they felt they shouldn’t be in Self Assessment. We can reassure these customers that they have been removed from Self Assessment.”
The alarm was first raised yesterday by AccountingWEB member bosclibby, who reported receiving penalty notices for clients who had successfully appealed against late filing penalties because 2011 Returns should never have been issued in the first place. Both clients received £580 late filing penalties based on £10 per day for the 58 days since the October 31 deadline for paper returns.
AccountingWEB member Jimess, whose client also received one of the letters, was told by the HMRC helpline that while his original penalty appeal had cleared the penalty, but the operative had “not checked the box or whatever they needed to do to clear the daily penalties”. In a follow-up statement on Friday afternoon, an HMRC spokesman said the mistake came about “when internal IT dates do not align correctly” in a new process to cancel SA returns already issued for a previous year.
“The cases have all been removed and are being corrected individually. We are urgently examining what happened and are acting on lessons learned from this error,” the spokesman added.
The latest incident is the third to occur in this area in the past year. In March, HMRC sent 17,000 letters wrongly claiming payments were late because payments received between 14-16 December 2011 were not recorded against outstanding charges until after the reminders had been selected for issue.
The previous incident was a simpler logistical error, when a lack of paper reportedly caused a number of statements of account to be sent out after the 31 July deadline last year. Yet it still echoes with news last week that the department had underestimated the workload that would result from its data cleansing exercise and had to switch more than 350 staff on to the task.
While HMRC has responded more quickly to this incident and is sending out letters to put taxpayers’ minds at rest, the sequence of events raises questions about whether the department learned anything from the previous incidents and has been able to put in place better review processes before dispatching penalty notices.
On this point, the deparment responded: “There is a detailed sampling process in place to ensure we only issue penalties correctly but this error was not picked up in the scans. We will be looking at the process again to make sure this error will not recur. There are over 9m taxpayers in Self Assessment . Unfortunately with a project of this scale things will very occasionally go wrong. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible.
“Over the last year we have worked very closely with agent stakeholders to devise a campaign which has been very successful in taking people out of SA. We have had a record number of taxpayers file on time, reversing a seven-year trend. We have lots more work to do but we are moving forward and whilst we deeply regret the issue of these incorrect letters, it should not be forgotten that this year at our invitation over 130,000 people have already been taken out of SA and people are still calling. We have nearly halved the numbers of people who received £100 penalties in comparison to last year and turned around years of late filing patterns.”