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HMRC internal manual

Inheritance Tax Manual

Fraud: what is fraud?

The general term ‘fraud’ has a wide significance, and there is no simple definition that covers the full range of conduct to which it may be applied. In departmental terms, ‘fraud’ means falsification with an intent to deceive, and this may be present even as a mere conscious understatement in, or omission from, an account. The practical effect of this is that you may encounter degrees of fraud on a widescale. The lesser forms may differ only slightly from negligence. Those at the other end of the scale may involve a deliberate and planned attempt to deceive and cheat HMRC by the omission, manipulation or invention of figures, or other records.

As far as accounts are concerned, taxpayers must certify an account as being correct and complete to the best of their knowledge. The taxpayer is clearly under a duty to take the trouble to read both the account and the accompanying notes. If items are knowingly omitted or the value of the property understated by more than can be accounted for by genuine errors or honest misunderstanding then the taxpayer may well be guilty of fraud. Broadly speaking it cannot be said that (except in the case of a very ignorant or simple minded person) the taxpayer could have had an honest belief in the truth and accuracy ofthe account.

If you suspect fraud you must follow the guidance for dealing with suspected fraud (IHTM36293).