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HMRC internal manual

Inheritance Tax Manual

Gravity: calculating the abatement

Normally the abatement in cases in which fraud cannot be proved should be not less than 15%. The range of abatements for such cases should be between 15% and 40%. The lower figure should be reserved for the most serious cases of negligence in which culpability falls short of fraud. On the other hand, an offence that involves only a minor degree of negligence associated with muddle and confusion on the part of a personal applicant (IHTM02161) result in an abatement of as much as 35%. But it should be rare for the full abatement of 40% to be given, since normally, the existence of some offence should be reflected in the abatement.

In general, when considering a penalty for incorrect accounts, information or documents (IHTM36103) under IHTA84/S247 (1), negligence offences will fall into one of the four categories listed below. Also shown below is, depending on the size of underpayment (IHTM36202), the range of abatements you may allow for gravity for offences falling into each of these categories.

Category of offence Range of abatement
Minor offences (IHTM36204) 30 - 35%
Middle range offences (IHTM36205) 25 - 30%
More serious offences (IHTM36206) 20 - 25%
Most serious offences (IHTM36207) 15 - 20%

Because each case must be judged on its merits, the range of abatements is illustrative and not prescriptive. You may well consider that further aggravating or mitigating factors are present which justify less or more abatement. You do not have to abate in 5% increments.

If the offence is considered to fit into more than one of these categories you should weigh up the evidence but, if in doubt, include it in the category that gives the greater abatement.

Cases of the most serious fraud will not qualify for abatement for gravity, whatever the size of the omissions. In other cases where fraud can be established, the abatement should take into account the circumstances of the case, but it should not normally exceed 15%.

Separate rules (IHTM36208) apply for penalties for failing to remedy an error (IHTM36106) or failing to notify us of an error (IHTM36107) in an account under IHTA84/S248.