Courts rule that Revenue & Customs cannot use fines as a cash cow

The Independent newspaper today reports that a tax tribunal decision could result in hundreds of small businesses receiving a refund of fines levied for late payment of tax. The Revenue had cunningly neglected to remind businesses that tax was due until they had already racked up hundreds of pounds in penalties. But, as the tribunal ruled, "when Parliament legislated to allow a penalty fine it did so 'to encourage compliance and, in cases where compliance did not take place, to levy a proportionate penalty'. [...] It is no function of the state to use the penalty system as a cash-generating scheme."

Small businesses, which cannot afford to employ a designated tax specialist, are particularly vulnerable to this particular wheeze. Publicity given to the Revenue's sharp practice and to Judge Geraint Jones's decision will, one trusts, give impetus to the efforts to pursue large corporations which have been granted dubious tax exemptions in the recent past.