Taking Opportunities from Change in 2009

Speakers

• Derek Allen: director of taxation for ICAS
• Gordon Wiseman: HMRC

What is reasonable care?

Under the new penalty regime that applies from 1 April 2009 taxpayers will have to show they have taken reasonable care in making a tax related decision to avoid a penalty.

‘Reasonable care’ is not defined in the legislation. Derek Allen understands that the HMRC approach to establishing reasonable care will be akin to the negative of ‘negligence’ as defined in Blyth v Birmingham Waterworks Co (1856) 11 Ex 781 when Baron Alderman said that ‘negligence is the omission to do something which a reasonable man guided upon those considerations which ordinarily regulate the conduct of human affairs would do or doing something which a prudent and reasonable man would not do’.

So reasonable care is doing what a prudent reasonable man would do in the...