Tens of thousands of automatic £100 penalties for filing late self-assessment tax returns may be invalid after a challenge in the tax tribunal.
About 840,000 taxpayers last year missed the deadline of midnight on January 31, which is just three days away.
But Khan Properties, which was fined £100 for filing a late company tax return, has won a case in the tax tribunal after it was ruled a tax official rather than a computer should have made the assessment for the fine.
The same rules — under section 100 of the Taxes Management Act — also apply to the assessment of penalties for individual tax returns.
Judge Richard Thomas said: “In my view the requirement is for a flesh and blood human being who is an officer of HMRC to make the assessment, that is to decide to impose the penalty and give instructions which may be executed by a computer.”
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HM Revenue & Customs insists the ruling does not apply to self-assessment tax returns and that penalties must still be paid.