As the world becomes more automated we’ve become used to computer generated messages affecting our lives and businesses.
They can only go so far, however. Computers can’t automatically fine you for filing a late tax return.
That was the decision of a tax tribunal in a case involving Khan Properties Ltd.
The company filed its return six weeks’ late and HMRC automatically imposed a computer-generated penalty of £100.
Khan challenged the penalty on the basis that to be valid, it had to be issued by a person.
The First Tier Tax Tribunal found in its favour. It held that under the Finance Act, an HMRC officer had to make the decision to impose a penalty and had to calculate the amount. That officer had to be a human being.
Once the decision and calculation had been made, the recording of the decision and the issuing of the notice of determination could be left to a computer. In this case, however, there was no evidence of any decision-making by a human being.
The penalty was therefore invalid, and the penalty would be cancelled.
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