EM5101 - Penalties: Culpability: Introduction

In general use, ‘culpable’ simply means ‘at fault’.

We use ‘culpable’ to describe any act (or failure to act) which triggers

• the provisions of the Taxes Acts authorising ETL assessments, or
• discovery assessments based on the fraudulent or negligent conduct condition, or
• any of the various penalty provisions that require fraudulent or negligent conduct.

In the penalty context it is important to bear in mind that an incorrect return, statement etc does not in itself attract a penalty. You must establish that the incorrect return etc was submitted fraudulently or negligently by the taxpayer. Where a return for a period beginning on or after 1 April 2008 which has a filing date of on or after 1 April 2009 contains an inaccuracy, you must establish that the inaccuracy was made deliberately or carelessly before you can charge a penalty under FA07/SCH24, see CH80000+.

For a failure penalty you must eliminate reasonable excuse and/or remedy without unreasonable delay.

You need to establish culpability whether the penalty is part of a contract settlement or the subject of a formal statutory determination, see EM5102.

For guidance on

• fraud or fraudulent conduct, see EM5105+
• neglect, negligence and negligent conduct, see EM5125+
• deliberate and careless behaviour, see CH81100+
• failures, see EM5105.