A4.532A Penalties for inaccuracy—careless behaviour
The penalty for inaccuracy in a document under the harmonised regime takes account of the underlying behaviour which gave rise to the inaccuracy. The legislation distinguishes between different behaviours, which are divided into categories reflecting the seriousness with which each is viewed (and thus the level of penalty). These categories are important because they determine both the existence of an offence and the level of penalty. The inaccuracy does not have to be deliberate for it to attract a penalty. However, deliberate behaviour (discussed at A4.567A) results in a higher penalty than mere carelessness.
Furthermore, there is scope for a penalty for careless inaccuracy to be suspended (see A4.567E).
A taxpayer is normally liable for a failure by the 'agent'. However, where they can satisfy HMRC that they have taken all reasonable steps to avoid the failure, no penalty will be due, despite a careless action by someone on their behalf. See the further commentary on this below.
Definition of careless
The legislation defines carelessness as failure by the taxpayer to take reasonable care1. If an inaccuracy was not originally careless or deliberate, it will be deemed to have been made without reasonable care if the taxpayer subsequently discovers it subsequently and fails to take reasonable steps to inform HMRC2.
In certain situations, it may be that the legislation specifically determines that an act or omission is a failure to take reasonable care; for example an inaccuracy in a tax strategy document is in certain circumstances deemed to be