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HMRC internal manual

Enquiry Manual

Penalties: Incorrect Returns, Accounts etc: Correction of Errors

This guidance applies to returns with a filing date on or before 31 March 2009.

Guidance for returns and other documents with a filing date on or after 1 April 2009, where the return relates to a tax period beginning on or after 1 April 2008, is contained in CH80000+.


FA98/SCH18/PARA 20(1)(b)

If a person makes a wholly innocent error in a return etc which, but for the fact that it is neither negligent nor fraudulent, would give rise to a penalty, and the error subsequently comes to their notice, they must remedy the error without unreasonable delay. Otherwise that person is deemed to have made the return etc negligently.

It follows from the wording of the Section that

  • the error must have been wholly innocent EM5180+
  • it must be remedied without unreasonable delay (that is, disclosed promptly), otherwise it is to be treated as having been made negligently. In effect, the Section does not of itself provide relief but creates an offence where there is delay in notifying HMRC of an error alleged to be innocent
  • it is not relevant in the case of a fraudulent or negligent taxpayer who wishes to make a disclosure.

The defence is open to a taxpayer who has made an innocent error even where the error is discovered in the first instance by HMRC.

In any case where an attempt is made by the taxpayer to invoke the Section it is essential to establish the precise facts and, in particular, to ascertain when and in what circumstances the error was discovered.