HMRC - we're cancelling penalty notices centrally

HM Revenue and Customs [HMRC] said this afternoon [9 October 2007] it is cancelling incorrect penalty notices to employers centrally and is writing to companies to let them know.

It’s also saying that the number of incorrect penalties is fewer than six per cent of the 202,000 notices issued on 24 September, so fewer than 12,120 companies are affected, it claims.

It’s still investigating the cause and so it’s unclear how HMRC knows how many companies are affected.

The Revenue has a reputation for playing down its mistakes and persuading the National Audit Office to do the same in its reports on the department’s finances and administration. So we’re not sure whether its assurances on the number of employers that have received incorrect penalty notices are based on fact, extrapolation from samples of incorrect penalties or wishful speculation.


HMRC is telling employers: “No action is needed by way of an appeal is needed if you receive a letter from us confirming that the penalty notice was sent to you by mistake and that we have in fact received your return.

“You will need to appeal however if you believe that your return was sent in by 28 May 2007 and you do not receive a letter from us by to confirm that we have received it.”

HMRC adds: ”

“The investigation is still ongoing into the cause of this matter. But, having identified all the incorrect penalty notices that were issued, the number of employers affected was in fact less than 6% of the total amount.

“HMRC is cancelling the penalties centrally now and writing to those concerned to confirm this has happened. But due to the industrial action involving the Royal Mail this written confirmation may not arrive in a timely manner. However, anyone concerned can simply contact HMRC either via the Employers helpline or a contact centre to confirm it has been abolished.”

This is HMRC’s statement on its website:

PAYE: 2006/07 Employer’s Annual Return (P35 and P14s); Incorrect Penalty Notices

We told you on 4 October that a number of penalty notices issued to employers on 24 September were incorrect.

We believe that all of the incorrect penalty notices have now been identified and are arranging for these to be cancelled centrally. From today, we will be writing to all the employers concerned to confirm this action.

No action is needed by way of an appeal is needed if you receive a letter from us confirming that the penalty notice was sent to you by mistake and that we have in fact received your return.

You will need to appeal however if you believe that your return was sent in by 28 May 2007 and you do not receive a letter from us by to confirm that we have received it.

In the light of this statement I have asked HMRC: “Will HMRC be publishing a full report on how it happened and the lessons learned to assure employers it won’t happen again?”

I won’t hold my breath for the reply.

Links:

HMRC website: notice dated 9 October 2007 – PAYE: 2006-07 Penalties for Outstanding PAYE Returns

HMRC slow to admit its systems issued incorrect penalties – for third year running

Spin and mistakes by HM Revenue and Customs – my comment

Accounting Web – comments on incorrect penalties

HMRC announces new era of openness

Concern over HMRC attempts to constrain directors’ public speeches

Watchdog raps harsh tax credits

Revenue red-faced as IT system wrongly fines 10,000 companies

Revenue makes 500,000 mistakes in tax codes

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