Taxman wrongly fines 10,000 UK businesses

HM Revenue & Customs (HMRC) is once again in the firing line after leaked documents revealed a computer error led to 10,000 UK companies being fined incorrectly.

The fines of up to £400 were dished out during 2004/05 and concerned the completion of tax forms.

But documents leaked to Computer Weekly revealed that a "basic flaw in the design of automatic systems" led to the wrongful issue of penalty notices.

The HMRC documents said: "We would like to apologise to employers and affected agents for the inconvenience undoubtedly caused by an error in our systems. We recently discovered that approximately 10,000 employers received penalty notices for 2004-05 although no penalty is due. This came to light because of the welcome increase in online filing."

In a statement, HMRC told El Reg it "very much regrets any inconvenience caused".

"We are putting measures in place to prevent these problems arising again. No customer will be faced with paying more tax than is due or paying any penalty issued in error," it said.

But insiders are concerned this is yet further evidence that HMRC is unable to keep up with the scale and complexity of the UK's tax system.

Last week it emerged that crooks had made off with at least £15m after defrauding the tax credit system by making false claims in the name of job centre workers. The £15m estimate came when HMRC executive director, David Varney, appeared before the House of Commons Public Accounts Committee last Thursday.

He was there to answer questions from MPs about an attack on the revenue, which forced HMRC to shut down its tax credit portal website at the start of December after uncovering an attempt to defraud the system using the identities of Department of Work & Pensions staff. ®