Many provisions of the UK tax code require HMRC to establish carelessness. Recent cases have thrown into doubt whether it is enough for HMRC to prove carelessness on the part of the taxpayer or whether they are also required to establish that said carelessness caused the loss of tax assessed by HMRC. The decision in Delphi Derivatives appears to have departed from orthodoxy in concluding that ‘but for’ causation is not required. It is hoped that the Upper Tribunal will have the chance to consider these divergent authorities and to clarify the test in due course.
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Many provisions of the UK tax code require HMRC to establish carelessness. Recent cases have thrown into doubt whether it is enough for HMRC to prove carelessness on the part of the taxpayer or whether they are also required to establish that said carelessness caused the loss of tax assessed by HMRC. The decision in Delphi Derivatives appears to have departed from orthodoxy in concluding that ‘but for’ causation is not required. It is hoped that the Upper Tribunal will have the chance to consider these divergent authorities and to clarify the test in due course.
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