EM5101 - Penalties: culpability: introduction

In general use, ‘culpable’ simply means ‘at fault’.

We use ‘culpable’ to describe any act (or failure to act) which triggers

• the provisions of the Taxes Acts authorising ETL assessments, or
• discovery assessments based on fraudulent, deliberate, negligent or careless behaviour, or
• any of the various penalty provisions that require fraudulent, deliberate, negligent, careless or non-deliberate behaviour.

You need to establish culpability whether the penalty is part of a contract settlement or the subject of a formal statutory determination, see EM5102.

For guidance on

• fraud, fraudulent conduct, see EM5105+
• neglect, negligence and negligent conduct , see EM5125+
• deliberate and careless behaviour, see CH81100+
• failures, see EM5105 and CH72100.

Not that there is no failure penalty if the taxpayer had a reasonable excuse for the failure and remedied it without unreasonable delay once that obstacle was out of the way.

• In the penalty context it is important to bear in mind that an incorrect return, statement etc does not in itself attract a penalty. You must establish that the incorrect return etc was submitted fraudulently, deliberately, negligently or carelessly by the taxpayer. Whether you need to consider deliberate or careless behaviour on the one hand, or fraudulent or negligent on the other, depends on whether you are considering penalties under FA07/SCH 24 or under earlier legislation.