Investigating incorrect accounts, information or documents: when to consider penalties?
You will need to consider the possibility of penalties when you have an incorrect account,information or document (IHTM36101) and additional tax ispayable. This will usually arise when either
- the taxpayer voluntarily tells you - by corrective account (IHTM10011) or otherwise - that there are additional taxable assets, gifts or settled property which were not included in the original account or that assets were included in the account at less than their open market value, or
- as a result of your own enquiries you discover that additional taxable assets have been omitted from an account, assets in that account have been undervalued or information or documents provided were incorrect.
But this in itself is not enough to trigger a penalty. We also have to demonstrate thatfraud (IHTM36291) or negligence (IHTM36301)is involved or, failing that, that there was an unreasonable delay in correcting the error(IHTM36106).
We also only consider taking a penalty where certain criteria (IHTM09083)are exceeded.