Human frailty acknowledged

The taxpayer submitted his 2009/10 self assessment tax return online on 31 January 2011 making an error at box 12 “losses used against income” of the capital gains summary by showing a figure of £20 595 – which he also entered in box 5 “losses brought forward and used in the year”.

The mistake generated a tax overpayment of £7 981.

HMRC reviewed the return and discovered the error. They told the taxpayer that the claim to set his losses against income was incorrect because the losses had already been set against capital gains. As result the taxpayer had underpaid tax of £8 238 which he immediately repaid.

The inspector decided the inaccuracy constituted carelessness on the part of the taxpayer and imposed a penalty of 15% of the underpaid tax.

The taxpayer appealed saying the £1 235.70 fine was excessive; he had...