The case hit the headlines earlier this month when the victim tried to reclaim £3,000 in overpaid tax for the year to 2009. HMRC said he was only owed £1,000 – and then fined him £1,400 for the mistake.

Accountants have now revealed the penalised taxpayer was a subcontractor from Kent who had simply got in a muddle with his CIS returns.

Tough new penalty regimes operated by HMRC mean the tax man can levy fines of up to 30% for ‘careless’ mistakes and between 30% and 70% in cases where taxpayers have been accused of being deliberately misleading.

The Kent subbie was hit with a 70% fine on the £2,000 difference between his claim and the actual rebate amount – even though HMRC still owed him money.

Law firm McGrigors, who are advising the man in his bid to have the fine over-turned, claimed HMRC is being heavy-handed and the discrepancy was a simple accounting mistake due to the fact that he filled-in his own self assessment

Phil Berwick, Director of Tax Investigations at McGrigors said:“Taxpayers will probably not be aware that HMRC have the ability to impose a penalty in these circumstances.  They will certainly be unaware that what appears to be a simple mistake can be treated so severely by HMRC.

“Despite being owed £1,000 from HMRC the taxpayer has been handed a fine for £1,400! Imposing a penalty like this is a gross over reaction and wholly disproportionate to the circumstances.

“Calculating a rebate can be complicated, and the taxpayer in question was unrepresented by an adviser, yet HMRC has refused to take any of this into consideration. We believe he made an honest mistake, so for HMRC to be fining him is completely outrageous.”