When careful taxpayers make mistakes

Taxpayers are usually presumed to have taken reasonable care over their tax affairs and the burden of proof is on HMRC to prove otherwise. The required standard varies among taxpayers depending on their abilities and circumstances. Although ignorance of the law is not a reasonable excuse, the tribunal is sometimes sympathetic to taxpayers who have waded out of their depth. Whether the use of an adviser is an effective defence to a tax-geared penalty depends on the type of adviser. If a lack of reasonable care is being alleged, it is essential to fully understand the taxpayer’s mindset when the mistake was made, as well as any steps the taxpayer took to file their return correctly. It may be that a simple step, such as reading an extract of HMRC’s guidance or telephoning the helpline (or an adviser), could indicate that the taxpayer has taken reasonable care.