CH53700 - Assessing Time Limits: Extended time limits: What is deliberate behaviour?

Tax can be under-assessed or under-declared, or over-repaid or wrongly credited, because of an inaccurate return or other document, a failure to notify us about relevant obligation, or because the person has carried out the wrongdoing.

The behaviour is deliberate if a person, or another person acting on behalf of that person, knows about 

• an inaccuracy in a return or document, when this is given to us, or
• a relevant obligation that they failed to notify us about, or
• a wrongdoing when they carried it out.

Examples of actions that might lead to a deliberate inaccuracy in a document or a failure to comply with an obligation include

• systematically paying wages without accounting for PAYE or NIC
• failing to register for VAT when it is known that the threshold for registration has been reached
• failing to register for aggregates levy or climate change levy when knowingly making taxable supplies
• failing to register for landfill tax when carrying out taxable activities
• deliberately failing to register for excise duty
• knowingly failing to record all sales, especially where there is a pattern to the under-recording, such as omitting all transactions with a particular customer or at a particular time of the week, month or year
• describing transactions inaccurately or in a way likely to mislead
• giving a VAT return to HMRC that includes a figure of net VAT due that is too low because the person does not have the cash at that time to pay the full amount, and later telling HMRC the true figure when he has the funds to pay
• similarly declaring less tax due for aggregates levy, climate change levy, landfill tax or excise duty because the person does not have the funds at that time to pay the full amount
• claiming a deduction for personal expenses of such a size or frequency that the inaccuracy must have been known
• failing to disclose participation in a known tax avoidance scheme
• understatement of consideration on SDLT1 compared to Land Registry form (TR1) to reduce the SDLT payable
• knowingly making a duplicated claim for repayment of SDRT
• for PRT knowingly claiming a higher (than is just and reasonable) proportion of shared costs in a taxable field
• for IHT, knowingly omitting or understating the value of a property.

A person who sends us a document containing a deliberate inaccuracy may assert that they did not intend to cause a loss of tax. For the purposes of assessing that loss of tax, the person will be treated as having deliberately brought about the loss of tax which resulted from the inaccuracy whether or not it was their intention.

Although HMRC can make assessments to recover any tax lost, we also have a criminal investigation policy and will refer the most serious cases for consideration of criminal proceedings where appropriate.

For examples of deliberate behaviour and its effect upon the assessing time limit, see CH53800. You will find further help in establishing behaviour in the guidance for the specific offence that has led to the under-assessment or over-repayment of tax.