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HMRC internal manual

Compliance Handbook

Assessing Time Limits: Extended time limits: What is careless behaviour

The 6-year 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

  • the person, see CH51600, or
  • a person acting on their behalf, see CH53200.

“Careless” means a failure to take reasonable care in relation to your tax affairs.

Carelessness can be likened to the longstanding concept in general law of “negligence”.

In the 1856 case of Blyth v Birmingham Waterworks Co, Baron Alderson said

Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. The defendants might be liable for negligence, if, unintentionally, they omitted to do that which a prudent and reasonable person would have done, or did that which a person taking reasonable care would not have done.

This 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 they did that would be deliberate, see CH53700. It is simply 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.

Repeated inaccuracies may form part of a pattern of behaviour which suggests a lack of care by a person in developing adequate systems for the recording of transactions or preparing tax returns. Similarly, repeated failures in relation to the relevant obligations in CH53900 to CH54100 inclusive may suggest a lack of care. It is, however, important to keep a sense of proportion. For example, repetition of the same inaccuracy would not always, of itself, indicate a failure to take reasonable care.

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.