CH402702 - Charging Penalties: establishing penalty behaviour: evaluating evidence: relevant information

The person’s abilities and circumstances (inaccuracies only)

When considering if reasonable care was taken, you must take into account the particular abilities and circumstances of the person.

You may need to consider

  • the person’s health and age
  • how much relevant experience or what relevant qualifications they have, see CH81120
  • if a person taking reasonable care would have known what to put on the return
  • if any estimates were a reasonable (albeit flawed) attempt to get the right answer
  • if a person taking reasonable care would have known that certain claims were not available to them, or that certain incomings or outputs were taxable
  • if this is a one-off transaction
  • if they are represented, see CH81130
  • if it should have occurred to them that they needed to take advice
  • whether they followed any advice that was given.

The person’s compliance history

You should check all relevant databases. The information we hold may include details of

  • whether returns have been filed and payments made on time
  • previous penalties charged
  • suspended penalties
  • previous inaccuracies, failures or wrongdoings where no penalty was charged
  • advice given about correct tax treatment
  • advice given on improvements to record-keeping needed.

The type of business and the nature of the inaccuracy, failure or wrongdoing found

It may be possible for your evidence to include a reasonable inference of deliberate behaviour based on certain factors in a case that led to that conclusion. Factors could include

  • Characteristics of the business, its trading activities and the documents and records held or missing. General guidance about specific business activities can be found in TIPS.
  • The nature of and pattern of the inaccuracies, failure or wrongdoing identified. Some inaccuracies, such as patterns of cash extraction from a business by their nature are highly unlikely to have occurred carelessly.
  • The person claims an inaccuracy was the result of another person supplying false information to them or withholding information (FA07/Sch1A)

If an inaccuracy was the result of another person’s actions, that could make them liable to a penalty, see CH81166 to CH81168.