The following Owner-Managed Businesses guidance note Produced 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 Penalties for inaccuracies in returns ― overview, Calculating the penalty for inaccuracies in returns ― behaviour of the taxpayer and Calculating the penalty for inaccuracies ― potential lost revenue guidance notes.
For detailed discussion of these concepts see Simons Taxes A4.532A (direct taxes) and De Voil Indirect Tax Service V5.345 (indirect taxes).
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:
whether the taxpayer is represented ― in most cases an unrepresented taxpayer will have a lower understanding of the complexities of tax law than a represented taxpayer. In the case of an employer, HMRC is likely to take into account whether the payroll is run in-house and if so the level of expertise and / or qualification of the in-house staff
the complexity of the tax affairs ― if a taxpayer has particularly complex affairs the taxpayer could reasonably be expected to take professional advice
the taxpayer’s record keeping
the systems, processes and controls in place to ensure that tax is dealt with appropriately
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
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Liability of the personal representativesAfter a person’s death, the property of the deceased is vested in the personal representatives (PRs) to enable them to manage and distribute the estate in accordance with the Will or the terms of intestacy. See the Personal representatives guidance note.The
Once a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the taxpayer.CorrectionHMRC has the right to amend the tax
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s
VAT fuel scale chargesWhat are fuel scale charges?The VAT fuel scale charge is a simplified method that can be used by a business that funds both business and private mileage costs for employees to account for any output tax due on the private use of the vehicle. The charge was introduced to