Raising enquiries into incorrect accounts, information and documents: general approach
Before you can consider whether a penalty may be due you will need to make sure you establish the facts that led to the provision of an incorrect account, information or document (IHTM36101). You need to raise such enquiries as are necessary for you satisfy yourself that the taxpayers either did or did not act prudently and reasonably in carrying out their statutory responsibilities.
Personal representatives (IHTM05012) must make ‘the fullest enquiries reasonably practicable in the circumstances’ to find out all appropriate property and the value of that property. It is always important to establish the particular circumstances the personal representatives found themselves in as they went about the task of putting together an account for delivery. The enquiries that might be reasonable for a personal representative to make in one set of circumstances may not necessarily be reasonable to expect in other circumstances. You should refer any cases of doubt or difficulty to the Penalty Portfolio Holder, via your manager.
Exactly what information you need will depend on the circumstances of the case. But bear in mind the onus is on you to demonstrate that the taxpayer has been negligent (IHTM36301) or, in rare cases, fraudulent (IHTM36291). In some cases this may mean having to convince the First-tier Tribunal or a Court that a penalty is due.
You must make sure that you have all the facts you need before you ask for a penalty. This means framing your questions so you get the precise information you are seeking. The next page (IHTM36152) gives examples of the sort of questions that you need to ask at the outset when someone delivers an incorrect account. There is separate guidance (IHTM36161) on how to consider replies to your enquiries.
You should invite the taxpayer to let you have any representations that they would like you to consider in deciding whether a penalty is due or, at the appropriate time, the amount of any penalty.
You should ensure that you keep up the momentum of your enquiry and, if necessary, apply the full procedures for dealing with delay by taxpayers (IHTM32121).