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How taxpayers can take “reasonable care”

Author: ICAEW Insights

Published: 01 May 2024

ICAEW’s Tax Faculty explains how taxpayers can take reasonable care when submitting a tax return, including when a second opinion may be needed.

A taxpayer should take reasonable care when sending a tax return or other document to HMRC. Failing to take reasonable care can extend the period within which HMRC can enquire into a return from four to six years. It can also increase the penalty charged if an error or inaccuracy is found in a tax return.  

As part of taking reasonable care, the taxpayer should provide full and accurate information to their adviser so that they can give advice based on the facts. Where any of those facts or circumstances change, the taxpayer should check with the adviser whether their advice remains the same. It may also be prudent to seek additional advice at certain stages in the process when a tax dispute escalates (eg, seeking specialist advice where deliberate behaviour is alleged or a Code of Practice investigation commences). Renewed advice is also recommended before commencing tax litigation or a judicial review.  

ICAEW’s Tax Faculty is aware of instances where HMRC has argued that a taxpayer failed to take reasonable care because they did not obtain a second opinion on the tax position of a transaction or arrangement. The Tax Faculty believes that this may be correct in limited circumstances only. One example is in relation to tax avoidance cases where the taxpayer chooses not to engage with tax advisers in order to avoid receiving an unfavourable analysis. In such circumstances, choosing not to seek a first or additional opinion can fall within the definition of deliberate behaviour.  See also FAQ 10 in Helpsheet B: Tax Advice of Professional Standards in Relation to Taxation.   


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