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.”
Campaign group UK Uncut Legal Action has moved one step closer to taking HMRC to court over the sweetheart tax deal it made with Goldman Sachs in December 2010
The activists are hoping that the High Court will ultimately quash the deal under which HMRC dropped a claim for £10m in interest payments on money that the bank owed in National Insurance contributions on staff bonuses.
They are seeking judicial review of the agreement and, according to The Guardian, the court has now granted them a preliminary permission hearing, which will take place on 13 June.
The money had been tied up in a tax avoidance scheme based in the British Virgin Islands (BVI). During the 1990s Goldman set up a company there which claimed to employ all of Goldman’s London bankers and second them to the bank.
Along with 21 other investment banks and other businesses, it purchased a tax avoidance scheme, known as an employee benefit trust (EBT), through which it indirectly invested bonuses in elaborate share option schemes.
In 2005, HMRC persuaded the UK courts that EBTs were illegitimate tax avoidance devices and all the businesses – bar Goldman Sachs – paid up. The bank continued to argue for the legitimacy of the scheme until 2010 when a judge decided that the bankers’ true employer was not the BVI company.
Details of the HMRC sweetheart deal emerged after documents were leaked to Private Eye and The Guardian.
When questioned by the Public Accounts Committee in October last year, HMRC permanent secretary for tax Dave Hartnett admitted that a mistake had been made in reaching the deal.
UK Uncut was set up to challenge the coalition government’s “unjust and unnecessary cuts programme” through the UK courts.
Director Tim Street told The Guardian: “A judicial review is clearly necessary and we’re confident that we have a strong case.
“The decision by HMRC to let Goldman Sachs off an alleged £10m tax bill must be reversed and the money handed over to the public purse.”
Julia Irvine
They are seeking judicial review of the agreement and, according to The Guardian, the court has now granted them a preliminary permission hearing, which will take place on 13 June.
The money had been tied up in a tax avoidance scheme based in the British Virgin Islands (BVI). During the 1990s Goldman set up a company there which claimed to employ all of Goldman’s London bankers and second them to the bank.
Along with 21 other investment banks and other businesses, it purchased a tax avoidance scheme, known as an employee benefit trust (EBT), through which it indirectly invested bonuses in elaborate share option schemes.
In 2005, HMRC persuaded the UK courts that EBTs were illegitimate tax avoidance devices and all the businesses – bar Goldman Sachs – paid up. The bank continued to argue for the legitimacy of the scheme until 2010 when a judge decided that the bankers’ true employer was not the BVI company.
Details of the HMRC sweetheart deal emerged after documents were leaked to Private Eye and The Guardian.
When questioned by the Public Accounts Committee in October last year, HMRC permanent secretary for tax Dave Hartnett admitted that a mistake had been made in reaching the deal.
UK Uncut was set up to challenge the coalition government’s “unjust and unnecessary cuts programme” through the UK courts.
Director Tim Street told The Guardian: “A judicial review is clearly necessary and we’re confident that we have a strong case.
“The decision by HMRC to let Goldman Sachs off an alleged £10m tax bill must be reversed and the money handed over to the public purse.”
Julia Irvine