Have You Been Careless Or Negligent?
I’ll be right upfront with you here and say that this is a trick question because HMRC regard carelessness and negligence as the same thing.
In common parlance the words “careless” and “negligence” mean two different things.
Careless mistakes are small errors that causes no real harm and come about because you’re not paying enough attention. For example, in school, a careless mistake in a maths class is when you get everything correct but have made an error (like not carrying over the 1) which can be easily corrected, another example is if you are mowing the lawn, you might mow over your mother’s prized daffodils, or you open the door and the cat rushes out – you get the idea!
Negligence – on the other hand – is a term that’s reserved for actions that have much greater consequences. For example: in a hospital a woman goes in to have her right leg amputated, but the surgeon removes the left leg. Another example would be when a man drives a car knowing that the breaks are faulty and as a result hits a pedestrian.
You get the picture here – these words have two different meanings and carry different weights – but HMRC says, “The longstanding concept in general law of “negligence” can be linked to the concept of “failure to take reasonable care” for penalties.” (FA07/Sch24).
So as far as HMRC are concerned there is no difference between carelessness and negligence. If they can get you to agree that you have been careless they can turn around and say that you have already admitted to being negligent.
You can see the HMRC official examples of carelessness on the page CH81145 – Penalties for Inaccuracies: Types of inaccuracy: Examples of careless inaccuracy, which is here; www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch81145
Basically, if you get anything wrong, HMRC is likely to call it carelessness because that single word allows them to accuse you of negligence, which can both broaden the investigation and increase penalties.
If HMRC says you have been careless you must respond as though they have called you negligent. If you feel you have not been negligent, take the issue to the Alternative Dispute Resolution (www.gov.uk/guidance/tax-disputes-alternative-dispute-resolution-adr) or a Tribunal (www.gov.uk/courts-tribunals/first-tier-tribunal-tax) and ask them to make a judgment on this single point.