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The FA 2007 penalty regime has been in operation since April 2009, but issues continue to arise in practice.
The Chartered Institute of Taxation raised a point concerning the penalty for carelessness in FA 2007, Sch 24 para 1. The penalty is directed against the taxpayer, but the institute wondered if it could also encompass the adviser?
In response, HMRC confirmed that it did not.
They said, ‘A penalty cannot arise upon an agent under para 1 because the clear intention of the legislation is that the person becoming liable to a penalty under this penalty is the taxpayer’.
HMRC went on to explain: ‘We would not usually expect agents to become liable to penalties under paragraph 1A of Schedule 24, since we would not normally expect an agent to cause an inaccuracy in a return by deliberately supplying false information to the person making the return.
‘Ordinarily, a tax adviser receives information from a person and then gives advice based on that information. It would be very unusual for a tax adviser, acting in that capacity, to give information to a person in a manner that would satisfy the necessary conditions for a penalty under this paragraph’.
