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Deliberate behaviour: what you need to know

Is it true that what you don’t know can’t hurt you? Sophie Rhind (Macfarlanes) examines recent cases considering the level of knowledge sufficient for a finding that a taxpayer’s behaviour is ‘deliberate’.

The consequences for a taxpayer that provides a document to HMRC containing a deliberate inaccuracy are severe. The taxpayer can be assessed in relation to tax going back 20 years will be subject to significant penalties and will face considerable reputational damage. For this reason it is important that there is a clear test to determine what constitutes deliberate behaviour.

The Supreme Court in HMRC v Tooth [2021] UKSC 17 (Tooth) clarified that HMRC needed to show deliberate behaviour specifically in respect of the inaccuracy of a statement but left open the question as to what type of knowledge a taxpayer needed to have in order to be acting deliberately: in particular could...

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