Tax office forced to apologise to 12,000 over false penalty letters

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Tax officials have wrongly warned nearly 12,000 people that they face £10 daily fines for not filling in their tax returns, Her Majesty's Revenue and Customs (HMRC) admitted yesterday.

Those affected by the administrative error had been previously told that they no longer had to complete a self-assessment form because their tax bill could be dealt with through the pay as you earn (Paye) system.

But the penalty letters explained that as well as a fixed penalty of £100 for late filing, fines of £10 a day would begin from Tuesday, up to a maximum of £900.

After six months, a further penalty of 5 per cent of the tax due or £300, whichever was greater, could be imposed, and after 12 months, another 5 per cent or £300 charge, which ever was more, could be added to the fines.

Yesterday HMRC said it was sending letters of apology to those who wrongly received the notices, and added that those affected need take no action.

However 650,000 people who are supposed to file their tax returns will still face the penalties unless they complete them by the start of next week.

An HMRC spokesman said: "We are very sorry and can reassure these customers that we know who they are and that this letter is incorrect – they do not owe a penalty."

The error follows another apology from HMRC last month after about a million letters containing potentially confusing information about child tax credits were sent out.