You must check the date from which these rules apply for the tax or duty you aredealing with. SeeCH81011for full details.
Elizabeth submitted an IHT account in respect of her late
father’s estate. The estate exceeds the amount of the IHT
“nil rate band” and is wholly non-exempt. It consists
of her late father’s own property and a qualifying interest
in possession in a settlement.
Elizabeth approached the Trustees of the settlement for
information for the IHT account because she did not have access to
the settlement’s books and accounts. The Trustees
deliberately did not tell her about a bank account containing
£50,000. They
Elizabeth submits the IHT account on the basis of the
information she was given by the Trustees. Some time later we
discover the under-statement.
The Trustees are liable to a penalty.
In this example Elizabeth took reasonable care, to the best
of her ability, to check that the information given to her by the
Trustees was accurate and complete, because it was not possible for
her to independently check if the details the Trustees gave her
were correct.
If she had also failed to take reasonable care, she may also
be liable to a penalty for the inaccurate IHT account - see
CH81125.
DD Glazing Ltd (DDG) sells UPVC replacement windows and doors.
Customers purchasing glazing can also buy an insurance policy to
cover them in the event that DDG goes out of business and is unable
to complete the installation. The insurance is provided by Homesure
Insurance Ltd.
Homesure charges £30 for the insurance. It has agreed
with DDG that DDG will add a £70 commission charge, meaning
that the cost of an insurance policy to the customer is £100.
The charge to the customer represents the “gross
premium” and Homesure must account for Insurance Premium Tax
(IPT) on this amount, not just the amount it actually receives.
DDG sends a report to Homesure each month detailing the
number of insurance policies sold and the payments due to the
insurer (£30 for each policy, plus IPT due on £100). DDG
keeps the balance of the commission payment. Homesure uses the
information from the monthly report to compile its IPT return.
However, Homesure later discovers that DDG has actually been
charging customers £200 for the insurance. Homesure should
have accounted for IPT on £200 and has under-declared its tax
liability.
DDG continued to send the insurer the IPT payments due on
£100. It deliberately failed to disclose the additional
amounts to Homesure on the monthly reports, knew that Homesure used
the information from the reports to compile its IPT return and, as
a result, knew that Homesure’s IPT return would be incorrect.
DDG is liable to a penalty.
Homesure has to account for the tax under-declared, but
provided it can show that it has taken reasonable care, see
CH81125, to check the accuracy of the
information provided by DDG it will not be liable to a penalty.
