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HMRC internal manual

Enquiry Manual

Penalties: Culpability - Defences: “Innocent Error”: Reliance on Third Party

The taxpayer has an obligation to make a return. Any accounts submitted on their behalf are deemed to have been submitted by the taxpayer unless they can prove that the accounts were submitted without the taxpayer’s consent or connivance. It is therefore the taxpayer’s personal duty to ensure that the returns and accounts are correct, see EM4802.


Many taxpayers will find that they need professional advice and it would be negligent for a taxpayer to complete a return without resolving a point on which he was in real doubt. The extent to which the taxpayer is entitled to place reliance on that advice will vary according to the circumstances. For example, an astute businessman who professes to rely on the advice of an obviously incompetent agent is unlikely to be believed by the tribunal. EM5130.

Material adjustments may have been made that arise from purely technical considerations. An expense genuinely incurred may be disallowed under a statutory prohibition of which the particular taxpayer might not be expected to be aware.


A taxpayer with a number of bank accounts will usually be a person of substance who will always want the best return on the capital invested and will know, at least approximately, what interest to expect. In addition, statements in the course of the year will tell precisely what has been credited to each account. A challenge would be made if those statements appear to materially understate the income. However, it is not uncommon in such a case for the taxpayer’s agent to request annual statements from the banks, in letter form, of the interest credits. Often such statements are incomplete. Any minor discrepancy arising from such an error can be regarded as innocent but a major discrepancy should have been spotted by the taxpayer (with earlier records to refer to, and own expectations as to interest) who would be considered negligent if the bank’s figures are merely accepted.


A taxpayer who consulted a Tax Office or contact centre and acted in good faith in accordance with the advice given (which should be shown to have been given) would not be negligent if the advice proved to be wrong.