The tax man has chased almost a million people for late-filing penalties that they did not owe.
The innocent taxpayers received threatening letters and calls from debt collectors claiming they wrongly owed an average £300 each.
HM Revenue & Customs has admitted sending out 963,000 penalty letters by mistake to taxpayers who had not filed a self-assessment return for at least three years.
Since April 5, HMRC has clawed £263 million in fines for late returns.
Now, MPs are considering an inquiry into why the error happened.
Lack of evidence
“I appreciate HMRC have to deal with millions of taxpayers but they need to focus on those who really are trying to evade the tax system, not those who shouldn’t be filling in forms at all,” said Nicky Morgan, who chairs the House of Commons Treasury select committee.
HMRC has explained that the taxpayers are no longer on the self-assessment database and will not receive any further claims for penalties.
Meanwhile, a judge has slammed HMRC for failing to provide evidence that another taxpayer owed a late-filing penalty.
Peter Jacks took his case to a tax tribunal. HMRC could not prove he had been sent a notice to file a return, just a print-out showing the request had been sent with an issue date.
Judge Geraint Jones said: “Adequate proof is a necessity; not a luxury.
Check with advisers
“We do not consider that we can be, or should be, satisfied, on the balance of probabilities, that a notice to file was posted by an officer of HMRC to the appellant simply based upon the computer held note ‘Return Issued Date’ alongside which appears ‘6/4/15’.
“Even if the notice to file was issued on 6 April 2015 there is, quite literally, no evidence or even any note to the effect that it was dispatched to the appellant at a specified address. That is a fundamental link in the chain upon which liability to a penalty depends.”
HMRC demanded £1,200 in penalties for the disputed 2014-15 tax return, claiming Jacks was six months overdue with his filing.
Jacks argued he had never received a notice to file.
Tax professionals advise anyone receiving an unexpected late-filing penalty should check with an adviser before paying the fine.
