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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: settlement: culpability - what does it mean?

Historically, training for EC staff advised that culpability meant ‘blameworthiness’. Whilst this is one dictionary definition it does not make clear what HMRC mean by this expression.

In general terms, ‘culpability’ means being at fault.

The culpable tax, NIC and other liabilities are the amounts outstanding because of the employer’s or contractor’s default.

Being ‘at fault’ is important to HMRC’s ability to ‘discover’ further liabilities for closed years and recover them by assessment, determination or decision.

Very often to make a ‘discovery’ you have to show that liability is outstanding because of the fraudulent or negligent conduct of the employer or contractor (or someone acting on his behalf).

Most commonly, being ‘at fault’ is important to HMRC’s ability to seek penalties, see COG915045 - Culpability and Penalties.