The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
The concepts of 'reasonable care' and 'careless mistakes' are contained within FA 2007, Sch 24, paras 3–4. As set out in para 1 of this Schedule, these behaviour-based penalties relate to inaccuracies, contained in a document, submitted by a person to HMRC.
For the sake of accuracy, the distinction between taking reasonable care and making a careless mistake is not relevant for the purpose of calculating penalties for errors within paras 1A (errors in taxpayer’s documents attributable to another person) and 2 (under-assessment by HMRC) of this Schedule.
Nor is this distinction relevant for the purposes of the main 'failure to notify a liability' penalties set out in to FA 2008, Sch 41.
Within FA 2007, Sch 24 (subscription sensitive) there are two key paragraphs of relevance to careless behaviour:
In other words, if a business can demonstrate to HMRC that reasonable care has been taken, in a document or return, they should not suffer a penalty.
Should the business be unable to demonstrate and evidence reasonable care, the penalty is a maximum 30% of possible lost revenue. This assumes that the error is not deliberate; should this be the case a higher level of penalty may be due.
There are a number of sources of guidance that must be referred to in order to fully define the concept of reasonable care in practical terms. These
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