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HMRC internal manual

Compliance Handbook

Penalties for Inaccuracies: Types of inaccuracy: Actions of another person

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

An inaccuracy in a person’s (P’s) return or other document, see CH81060, may be caused by information given (or withheld) by another person (T). The fact that another person (T) gave information to, or withheld information from, P (directly or indirectly) is not in itself evidence that the inaccuracy in P’s return or other document is attributable to T.

Every person is responsible for the accuracy of their return or other document they provide to HMRC and we expect them to take reasonable care, CH81120 and CH81125, within their ability and circumstances to make sure that

  • any information given by another person and used in their return or other document is correct and complete, or
  • any information requested from and not provided by another person is not available from another source.

If P has to rely upon T to supply information to complete a return or other document and T supplies full and accurate information, then any inaccuracy cannot be attributable to T.

However, if P has to rely on T, and T

  • deliberately supplies false information, or
  • deliberately withholds information,

then any inaccuracy that results is attributable to T. T may be charged a penalty, see CH81165.

P may also be charged a penalty for the same inaccuracy if they did not take reasonable care to ensure that the information supplied by T was correct.

  • The total of the penalties charged to P and T cannot normally exceed 100% of the potential lost revenue, see the example at CH84974.
  • However, if the inaccuracy involves an offshore matter and the tax at stake is income tax or capital gains tax, the maximum penalty we can charge to P and T may be higher. See CH116100 for the circumstances where we can charge a higher penalty. CH116800 explains how we restrict the higher penalties on P and T, where necessary, so the total penalties charged to P and T cannot exceed the higher maximum percentage allowed.

‘Deliberately’ means that T knows that they are giving P false information or are withholding information from P that P needs to ensure the accuracy of their document when they give it to us, see CH81167.

‘Information’ means facts or explanations of facts.

‘False’ information is rather more than information that is wrong. It is information that is intended to deceive the recipient. It is information that is incorrect and/or incomplete but is represented as being the truth.

See the guidance at CH84545 where P relies on an agent or other adviser.