Automatic fines issued to 800,000 taxpayers every year by the HMRC computer for late filing of tax returns may be illegal, a judge has ruled.

A small property business, Khan Properties, appealed against its automatic fine for being late and won its case, judge Richard Thomas ruling that in his view the approach HMRC should have taken was to have a “flesh-and-blood human being who is an officer of HMRC make the assessment, that is to decide to impose the penalty and give instructions that may be executed by a computer”.

The ruling has not been appealed by HMRC, and a flood of claims for reimbursement of fines levied by the HMRC computer is expected.

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