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HMRC internal manual

Enquiry Manual

Penalties: culpability: neglect - failures and omissions


The obligation to notify chargeability EM4550+ extends to every person chargeable to tax or NIC. The obligation to make a return of income and gains EM4560+ extends to every person on whom notice is served requiring a return. Failure to meet either of these obligations was defined as neglect and amounts to negligence.

A failure is subject to the ‘extra time’ EM5151 and ‘reasonable excuse’ EM5152 defences.

Errors or Omissions

Negligence can exist in any case in which a statement of income (whether on a statutory return form, a non-statutory form, or in the form of an account) submitted for HMRC purposes is found to contain an error or omission which has occasioned, or could occasion, a loss of tax or NIC.

In effect, wherever any statement of income delivered by the taxpayer or ‘on behalf of’ the taxpayer, see EM5130, for the purpose of assessment is not true and complete, there is a prima facie case for the view that the error or omission is at least negligent and possibly fraudulent. It makes no difference whether the error or omission came to light during a full or aspect enquiry EM5140.

Similar considerations apply where, in connection with the determination of tax liability, you or the tribunal act on any statement made, whether orally or in writing, by or on behalf of the taxpayer, which is later found to have been incorrect and to have resulted in an actual or potential loss of tax or NIC.

There is the possibility of an error being regarded as entirely innocent EM5180+.

Where you are considering a penalty for an inaccuracy in a return or other document relating to a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will need to establish that the inaccuracy was made deliberately or carelessly. Guidance is at CH81100+.