Rebel without a causal link: HMRC’s position on proving carelessness
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In this article in the Tax Journal, we comment on how a “careless” mistake can have serious consequences in relation to your tax position.
If HMRC can show that a loss of tax was “brought about carelessly” they can use the extended six-year time limit under TMA 1970 s 36 to issue a discovery assessment. A loss of tax will be “brought about carelessly” by a person “if that person fails to take reasonable care to avoid bringing about that situation” (TMA 1970 s 118(5)). Similarly if an inaccuracy in a document given to HMRC is due to a failure to take reasonable care HMRC can issue a penalty under FA 2007 Sch 24.
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