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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for inaccuracies: other penalty issues: agency - introduction

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

Even if a person (P)’s document is given to HMRC by or through a third party or parties, if it contains a careless inaccuracy P remains liable to a penalty under Paragraph 1 (1) Schedule 24 FA 07. It does not matter whether the careless inaccuracy was put in the document by P or a third party. This extends to the obligation to tell HMRC about an inaccuracy when it is discovered (Para 3(2)).

Similarly, P remains responsible for a failure under paragraph 2(1)(b) and 2(2)(a) where a third party was acting on P’s behalf and was in a position to notify HMRC of an under assessment.

However, if P satisfies us that they themselves took reasonable care to avoid the inaccuracy or failure, there will not be a penalty, see CH84540.

If an agent has acted dishonestly, the behaviour of the agent and person (P) must be considered separately. It is not simply a matter of whether or not P checked the agents work as carefully as they were able. Irrespective of the agent’s dishonesty, P’s behaviour will be determined by reference to the relevant facts.

For example: P’s behaviour would be deliberate if they were complicit with an agent in order to evade tax but would be despite taking reasonable care if they had no possible way of knowing about the agent’s dishonesty. A person’s behaviour would be careless if they could have done more to stop the agent acting in the way they did. Elements of the guidance in CH84540 can be used to help establish this, including if the person did not check the agent’s work to the best of their ability or if the person is careless in their choice of agent.

For further guidance on the relationship between a person and an agent, see CH84530.

For further guidance on the relationship between the penalty chargeable on another person (T) because T deliberately gave a person false information (or withheld information) and tax advisers, see CH84545.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Also, 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.

FA07/SCH24/PARA18