CH81167 - Penalties for Inaccuracies: Types of inaccuracy: Actions of another person supplying or withholding information

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

The other person (T) must know that the result or outcome of supplying false information (or withholding information) will be that P’s return or document contains an inaccuracy that amounts or leads to

• an under-statement of a liability to tax, or
• a false or inflated statement of a loss, or
• a false or inflated claim to repayment of tax, see CH81071.

To establish this you must be able to demonstrate that

• T knew that the information was likely to be used by P to complete one or more returns or documents, and
• T knew that if they gave false information (or withheld information) the return(s) or document(s) would be inaccurate, and
• T then gave the false information (or withheld information) as a result of which a particular return or document understated the tax due, or overstated a loss or repayment.

You therefore need to establish that T knew the consequences of their actions. Not only must they have supplied false information (or deliberately withheld information) but they must also have known that P’s returns or documents would be inaccurate as a result. It is not a defence for T to state that if P had conducted further investigation they would have realised that T had provided false information (or withheld pertinent information).

You will need to carefully examine the underlying actions that led to the inaccuracy and record your findings.

There is no requirement for T to have any motive for their action but, evidence that T has benefited financially as a result of the inaccuracy in P’s return or other document may add to the weight of evidence that T’s actions were deliberate.

See CH81168 for practical examples.