Revenue dishes out outlandish fine

A man owed £1k by the taxman has been fined £1.4k for screwing up his sums.

Last Updated: 31 Aug 2010

The folk at HMRC are hardly the most popular cogs in the economic machine, but sometimes they really don't help themselves - like when they fine a bloke £1.4k for submitting an incorrect rebate claim.

The man in question said the taxman owed him £3k in overpaid tax for the year to April 2010, while HMRC put the figure at only £1k. So they fined him 70% of the difference. Is it us, or does this seem a mite unsporting? They're slapping him with a whopping fine for the error, when they're the ones who owe him money. It's like a man kidnapping your wife because you claimed they'd slept together, when in fact they'd only kissed.

HMRC are of course claiming the need to have some way of policing how people assess their own taxes, otherwise everyone would be trying to get one over on them. Which is a fair point. Under new penalty regulations they can fine taxpayers up to 30% of tax owed for careless mistakes, and as much as 100% when they think you're trying to pull a fast one.

But this case is subtly different: our man wasn't assessing what he owed - he was working out what the taxman owed him. And when you're trying to get back what is rightfully yours, perhaps it requires a change of rules. A little more benefit of the doubt, perhaps? It's hard to tell when a mistake is genuine, but it's perhaps unwise to go round handing out hefty fines every time someone forgets to carry a 1.

According to HMRC, 2.93m taxpayers claimed a rebate last year - that's nearly a third of all nine million self-assessment taxpayers. Perhaps such a rise in claims, both correct and mistaken - as well as the downright dishonest - are a natural part of getting people to do their own sums. It just so happens to cost quite a bit of money chasing all this up. The Tories may need to take note as they bang the drum for their Big Society.

It's been said that one of the reasons the new penalty law was passed was because MPs were sleeping on the job, that they didn't scrutinise the Bill properly as it went through. But taxpayers should be alert: the election winner won't be so sleepy as it embarks on that desperate scramble for cash.


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