IHTM36167 - Investigating incorrect accounts, information or documents: deciding the amount of penalty due

For a penalty to be due on an incorrect account, information or document ( IHTM36101) you need

• to first satisfy yourself through your enquiries and investigations that there is fraud (IHTM36290) or negligence ( IHTM36301)
• decide which penalty provision ( IHTM36102) applies so that you can calculate the maximum penalty payable ( IHTM36177)
• you then have to establish by careful evaluation of the facts the degree of culpability so you can decide to what extent the maximum penalty can be abated ( IHTM36177).

If there is no evidence of fraud or negligence then no penalty is due in respect of delivering, furnishing or producing incorrect accounts, information or documents. But if there was a failure to correct an error without unreasonable delay ( IHTM36208) then you will need to consider a penalty under IHTA84/S248.

Before negotiating a penalty ( IHTM36221) with the taxpayer you will need to get prior approval ( IHTM36223) from your manager for the amount of penalty (‘the expected offer’ ( IHTM36174)) you are seeking.

Even if you decide not to take a penalty you should consider writing to or telephoning the taxpayer ( IHTM36271) to explain what might be done in future when providing an account, information or document so that the question of penalties does not arise.