The following Corporation Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:
The penalty regime in FA 2007, Sch 24 provides that there is no penalty where an inaccuracy leading to an underpayment of tax is made on a return or other document, provided the person took reasonable care. There is no statutory definition of reasonable care, so reliance must be placed on the guidance in the HMRC manuals and case law.
For a general overview of the penalty regime, see the Penalty rates and structure for inaccuracies in returns, Calculating the penalty for inaccuracies in returns - behaviour of the taxpayer and Calculating the penalty for inaccuracies - potential lost revenue guidance notes.
Reasonable care will vary depending on the capabilities and circumstances of the taxpayer and the complexity of the issues affecting them. Therefore, the following are likely to be taken into account:
HMRC provides its understanding of reasonable care at CH81120 and CH81130.
An Officer must first assess the taxpayer’s circumstances and abilities before coming to a conclusion about culpability for an inaccuracy. Anecdotal evidence suggests that in some cases HMRC is quick to assume that all inaccuracies result from carelessness.
See Example 1.
There is particular guidance at CH81120 for those undertaking a transaction about which the
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