The word culpable is used here to describe any act (or
failure to act) that triggers a penalty. But it is a word that you
should avoid using outside HMRC because of its emotive nature. You
should instead try to use words such as ‘tax on which the
penalty is due’ instead of culpable tax.
An important part of the settlement involves the
establishment of culpability, that is negligence (
IHTM36301) or fraud (
IHTM36291), and the consequences. In
general you will only need to seek to establish fraud (
IHTM36226) as part of a pecuniary
settlement if the abatement for gravity (
IHTM36201) is affected, or you feel,
exceptionally, that you need to impress on the
taxpayers the gravity of their actions.
When you inform the taxpayer (
IHTM36224) that you are seeking a
penalty you set out the reasons why you believe a penalty is due
and how the amount of penalty you are seeking is supported by the
facts. If neither the agent nor the taxpayer denies the charge it
may be taken that the culpability is established. Having
established culpability, you can explain its effect on the
recoverability of penalties. There is separate guidance on what you
should do if they dispute culpability (
IHTM36233) or do not make the expected
offer (
IHTM36231).
If culpability is discussed at an interview or over the
telephone you need to record what was said about culpability in the
note of the interview or the telephone call. You will need to
identify what was said about culpability if a report of the case
has to be submitted to Tax Administration Advice (
IHTM36361).
