The abatement in respect of the seriousness of the offence is not concerned with what happens during the enquiry (unless irregularities continue while it is going on). It requires an appraisal of all the circumstances that have resulted in a loss of tax under two sub-headings which are inter- related, that is, size and gravity.
Size will be both absolute and relative in any case.
The offence of a well-to-do purchaser who pays £1.1m for
a property but declares only £1m as the chargeable purchase
price is equivalent to that of a purchaser of more modest means,
who purchases a property for £110k but declares only
£100k.
Size, or relative size, should therefore be taken into
account as a constituent of the abatement. It is a useful pointer
to the gravity of an offence, just as it may of itself be
conclusive of culpability.
Gravity means, broadly speaking, the degree of culpability, ranging from a minor degree of negligence to a case of serious fraud with a variety of intermediate steps.
The abatement in cases in which fraud cannot be proved should
not normally be less than 15 per cent. The range of abatements for
such cases should be taken as between 15 per cent and 40 per cent.
The lower figure is reserved for the most serious cases in
which culpability falls short of fraud, and the abatements for less
serious cases scaled up accordingly within the range.
A more serious case of negligence only will, therefore,
normally qualify for an abatement in the region of, but not less
than, 15 per cent. On the other hand, an offence which involves
only a minor degree of negligence associated with muddle or
confusion might, subject to seriousness, rate as much as 35 per
cent.
It should be rare for the full abatement of 40 per cent to be
given. Normally, the existence of some offence should be reflected
in the abatement.
There may, however, be the exceptional case. For example,
omissions at a time when the purchaser was aged or infirm, or there
were other special circumstances which make it likely that penalty
proceedings would be unsuccessful. It may then be appropriate to
waive the penalty or include a nominal amount only.
The more serious fraud cases are dealt with by SCI and will
often rate abatements considerably below the 15 per cent figure. In
other cases where fraud can be established, an abatement not
normally exceeding 15 per cent should be given. The amount should
be determined in accordance with the circumstances of the case.
