Investigating incorrect accounts, information or documents: deciding the amount of penalty due
For a penalty to be due on an incorrect account, information or document (IHTM36101) you need
- to first satisfy yourself through your enquiries and investigations that there is fraud (IHTM36290) or negligence (IHTM36301)
- decide which penalty provision (IHTM36102) applies so that you can calculate the maximum penalty payable (IHTM36177)
- you then have to establish by careful evaluation of the facts the degree of culpability so you can decide to what extent the maximum penalty can be abated (IHTM36177).
If there is no evidence of fraud or negligence then no penalty is due in respect of delivering, furnishing or producing incorrect accounts, information or documents. But if there was a failure to correct an error without unreasonable delay (IHTM36208) then you will need to consider a penalty under IHTA84/S248.
Before negotiating a penalty (IHTM36221) with the taxpayer you will need to get prior approval (IHTM36223) from your manager for the amount of penalty (‘the expected offer’ (IHTM36174)) you are seeking.
Even if you decide not to take a penalty you should consider writing to or telephoning the taxpayer (IHTM36271) to explain what might be done in future when providing an account, information or document so that the question of penalties does not arise.