MLR1PP15050 - Type 1 penalties using the scale charge framework (compliance breaches): carelessly or knowingly breaching the Regulations

Failure to take reasonable care can be best explained by an extract taken from the FTT decision in HMRC v David Collis where Judge Berner said,

“That penalty applies if the inaccuracy in the relevant document is due to a failure on the part of the taxpayer (or other person giving the document) to take reasonable care. We consider that the standard by which this falls to be judged is that of a prudent and reasonable taxpayer in the position of the taxpayer in question.”

Where a business has carelessly rather than knowingly breached the Regulations, they will receive a 25% reduction of the starting penalty.