CH53400 - Assessing Time Limits: Extended time limits: What is careless behaviour
The 6year time limit applies where Income Tax, Capital Gains Tax, Corporation Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax and Petroleum Revenue Tax has been under-assessed or over-repaid due to the careless behaviour of
S118(5) TMA says that ‘... a loss of tax or a situation is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss or situation’. The reasonable care which should be taken is judged by reference to a prudent and reasonable person in the position of the taxpayer in question. In the context of a person with the obligation deliver a tax return, the person making that return is expected to take care to get the return right in respect of both matters of fact and matters of law.
Carelessness is not a question of whether or not the person knew about an inaccuracy in a return or document or their failure to comply with an obligation. If the person knew about the inaccuracy or that document was inaccurate, and nevertheless provided it to HMRC intending HMRC to rely on it as accurate, that would be deliberate behaviour (see CH53700). Carelessness is a question of examining what the person did or failed to do and asking whether a prudent and reasonable person taking reasonable care would have done that or failed to do that in those circumstances.
People do make mistakes. We do not expect perfection. We are simply seeking to establish whether the person has given the care and attention that could be expected from a reasonable person taking reasonable care in similar circumstances.
For examples of careless behaviour and its effect upon the assessing time limit, see CH53500. You will find further help in establishing behaviour in the guidance for the specific offence that has led to the under-assessment or over-repayment of tax.