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HMRC internal manual

Compliance Handbook

Charging Penalties: establishing penalty behaviour: discussing penalties with the person's agent

The agent or adviser may add useful information about the reasons for the inaccurate document, failure, or VAT or Excise wrongdoing.

It is a person’s responsibility for getting their tax affairs right, see technical guidance at CH84540. Any discussion about the reason for the inaccuracy, failure or wrongdoing cannot be delegated to an agent as you may need to ask the person to explain their actions. Any questions or discussions may be addressed to the person via their agent.

In all cases where an inaccuracy has been found you need to gather evidence of how the inaccuracy arose in order to establish if a penalty is payable or not.

If the inaccuracy was the result of the information supplied to the agent, you have the power to require the person to provide any documents that are reasonably needed to establish the penalty position.

If you have evidence that shows the inaccuracy was the result of an agent’s mistake and the person has:

  • given the adviser a full and accurate set of facts
  • checked the adviser’s work or advice to the best of their ability and competence and
  • adopts it

Then the person will not normally have acted carelessly, and there is no penalty, unless the person employed an agent who was not competent to act on their behalf.

Where you suspect that a tax agent has engaged in dishonest conduct, see technical guidance starting at CH180000 and operational guidance starting at CH880000. Where you identify other types of poor agent behaviour, see CH800000.