CH81140 - Penalties for Inaccuracies: Types of inaccuracy: Careless Inaccuracy
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
The law defines ‘careless’ as a failure to take reasonable care.
Failure to take reasonable care can be likened to the longstanding concept in general law of “negligence”.
In the 1856 case of Blyth v Birmingham Waterworks Co, Baron Alderson said
Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. The defendants might be liable for negligence, if, unintentionally, they omitted to do that which a prudent and reasonable person would have done, or did that which a person taking reasonable care would not have done.
There is no question of whether or not the person knew about the inaccuracy when they submitted the return. If they did, that would be deliberate, see CH81150 and CH81160. It is simply a question of examining what the person did or failed to do and asking whether a prudent and reasonable person would have done that or failed to do that in those circumstances.
Repeated inaccuracies may form part of a pattern of behaviour which suggests a lack of care by a person in developing adequate systems for the recording of transactions or preparing tax returns. It is, however, important to keep a sense of proportion. Repetition of the same inaccuracy would not always, of itself, indicate a failure to take reasonable care. If however a person becomes aware of the causes of an inaccuracy but after this nevertheless repeats the inaccuracy this may indicate deliberate behaviour in relation to those repetitions.
People do make mistakes. We do not expect perfection. We are simply seeking to establish whether the person has taken the care and attention that could be expected from a reasonable person taking reasonable care in similar circumstances.
For practical examples of failure to take reasonable care, see CH81145.
