SDLTM86390 - Compliance: Penalties

Culpability: General: What does culpability mean

HM Revenue & Customs uses culpable to describe any act (or failure to act) which triggers any of the various penalty provisions.

It is important to bear in mind that an incorrect land transaction return does not of itself attract a penalty. It must be established that the incorrect land transaction return was submitted fraudulently or negligently by the purchaser.

The current legislation refers to fraud or fraudulent conduct or neglect or negligent conduct. See SDLTM86400. Establishing neglect will be sufficient for virtually all cases handled in Stamp Offices.

The nature of the offence may not be the same for all the transactions covered by the enquiry. For some transactions there may have been a failure either to notify chargeability or to make a land transaction return, whilst for others there may have been fraudulent understatements. In the majority of cases dealt with locally there will only be one transaction per enquiry.

Sometimes, the character of the case will change during the enquiry. What may have begun as a comparatively minor error may have hardened in time into a case of blatant fraud.

There may, at one extreme, be an innocent error, involving no culpability, shading through negligence to, at the other extreme, calculated fraud.

All these considerations must be taken into account when calculating the maximum statutory penalties and when deciding how far those penalties should be abated. A compliance caseworker should consider each offence and apply the appropriate abatement factors to reach the penalty loadings.

Although an impression may have been formed at an early stage in the enquiry, A compliance caseworker should not normally attempt to assess the degree of culpability until the closing stages, when all the facts have been established.

The expression fraud or fraudulent conduct should not be used.

In any case where there is reason to believe there has been fraud or fraudulent conduct a submission must be made to SCI/CI via a Grade 6 officer.

Injudicious use of the allegation may devalue it in the eyes of the purchaser and, by provoking an angry response from the purchaser, may well prove counter-productive.