IT systems atHM Revenue & Customshave
incorrectly issued up to 14,000 late-filing penalty notices to
companies that submitted their annualtax returnsbefore the 19 May
deadline.
It is the third year running that the department's systems have
issued thousands of unjustified penalty notices to companies.
The Revenue owned up to the problem on 4 October only after
being contacted by Computer Weekly and by complainants, including
payroll agents, which had been hit by fines of £400 each.
Penalty notices were issued automatically on 24 September to
companies for which Revenue systems had not recorded the receipt of
an annual Pay As You Earn (PAYE) return by 19 May.
A Revenue spokesman said the number of incorrect penalties was
"fewer than 8%" out of the total of 202,000 penalty notices. But
the department was unable to explain what had gone wrong.
A Revenue statement said, "An early investigation into the
validity of the penalty has found that a small amount, and
certainly no more than 8%, may be invalid. While the cause is still
being investigated, early results have indicated that this seems to
be IT systems management (ie. a human element) rather than an
unknown IT systems fault."
It added, "We are urgently investigating and will provide an
update by Tuesday 9 October at the latest."
The problems have been particularly frustrating for accountants
who file their clients' returns online - a process that is supposed
to be faster and cheaper than paper submissions.
Nichola Ross Martin, tax editor at industry website Accounting
Web, said the poor reliability and accuracy of the Revenue's IT
systems had been a "major bugbear" to employers that file annual
returns over the internet.
Many employers contract out the online filing of their annual
returns to accountants and payroll software specialists. Ross
Martin said that when employers receive incorrect penalties they
are apt to blame their outsourcing payroll specialists for not
filing returns before the May deadline.
PAYE researcher Matt Boyle said it was costing employers,
payroll companies and accountants millions of pounds to deal with
the incorrect penalties, in part because agents have to contact
their clients to explain the penalty notices.