In a damning judgment, the Tax Tribunal has ruled that Her Majesty’s Revenue and Customs is operating a policy of “deliberately” waiting months before alerting businesses that have not filed their tax returns so that late- payment fines stack up.

If upheld on appeal, the judgment could result in between 50,000 and 100,000 firms being able to claim refunds on tens of millions paid in fines.

“It is no function of the state to use the penalty system as a cash-generating scheme,” said the judge, Geraint Jones, QC. “We have no doubt that any right-thinking member of society would consider that to be unfair and falling very far below the standard of fair dealing expected of an organ of the state.”

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