With all the news of artificial intelligence (AI) in the media at the moment, it might be tempting to think that humans will soon be replaced by computers. But, in a recent tribunal case, a company had its late filing penalty quashed because the notice had been issued by a machine rather than a person.

In the case of Khan Properties Ltd. vs HMRC, the company should have filed its Corporation Tax return for the tax period ending on 30th March 2016 by 31st March 2017. However, the return was not submitted until 16th May 2017. As a result, the company received a late filing penalty of £100 from HMRC. The company appealed against the penalty.

HMRC refused to accept that the company had an excuse for not filing on time, so the case went to the tax tribunal. The case was just one of a large number of cases involving similar late filing penalties.

Khan Properties appealed against the penalty on the grounds that it was the first time that the company had filed a late return, the delay did not cause any loss of revenue to HMRC, and that the delay was partially the fault of HMRC because they had suddenly withdrawn their Corporation Tax filing software, and it had taken the company some time to find an alternative.

It was up to HMRC to prove that the penalty was valid. The penalty notice had been issued by HMRC, but there was no name on the notice.

The judge, in making his decision, referred to section 100 of the Taxes Management Act 1970, which says that an officer can determine whether a penalty should be imposed or not, thus implying that an actual person has to decide that a penalty will be imposed.