What is reasonable care for tax purposes?
Answered 17 March 2026
Here is a comprehensive answer on what "reasonable care" means for UK tax purposes.
What the law says
The legal framework for reasonable care arises primarily in the context of penalties. Under FA 2007, Schedule 24, a penalty is not due where a person takes reasonable care to complete a document correctly, even if it later turns out to be wrong. The law defines "careless" as a failure to take reasonable care.
Where a person relies on another person (e.g. an agent) to file returns, that reliance is not a reasonable excuse unless the person took reasonable care to avoid the failure — and this extends beyond merely appointing a suitably qualified agent; it requires taking reasonable care to avoid the specific failures of that agent.
HMRC guidance / practice
The core standard
HMRC's Compliance Handbook (CH81140) defines the standard as follows:
"Reasonable care can best be defined as the behaviour which is that of a prudent and reasonable person in the position of the person in question."
This is an objective test: it involves examining what the person did or failed to do and asking whether a prudent and reasonable person would have done the same in those circumstances.
Tailored to individual abilities and circumstances
Critically, the standard is not one-size-fits-all. Per CH81120:
"Every person must take reasonable care, but 'reasonable care' cannot be identified without consideration of the particular person's abilities and circumstances… we do not expect the same level of knowledge or expertise from a self-employed unrepresented individual as we do from a large multinational company. We would expect a higher degree of care to be taken over large and complex matters than simple straightforward ones."
Perfection is not required
HMRC explicitly acknowledges that mistakes happen:
"People do make mistakes. We do not expect perfection. We are simply seeking to establish whether the person has taken the care and attention that could be expected from a reasonable person taking reasonable care in similar circumstances, taking into account the ability and circumstances of the person in question."
Examples of reasonable care being taken
HMRC treats a person as having taken reasonable care in the following situations:
- Holding a reasonably arguable view of a situation that is subsequently not upheld;
- Making a minor arithmetical or transposition error that does not produce an obviously odd result;
- Following HMRC advice that later proves wrong, provided full details were given;
- Acting on advice from a competent adviser which proves wrong, despite the adviser being given accurate facts;
- Having comprehensive internal accounting systems and controls in place, even if minor processing errors arise.
Reliance on an agent
Where an agent prepares a return, the taxpayer retains personal responsibility. HMRC expects the taxpayer to:
- Discuss the figures inserted by the agent;
- Understand the basis and origin of figures in the agent's computations;
- Compare the agent's figures with documents supplied and prior-year figures.
Engaging a qualified adviser and providing them with all relevant information can satisfy the reasonable care standard. However, relying on tax reporting tailored for another jurisdiction (e.g. a US tax form) to complete a UK return, without further steps, is unlikely to constitute reasonable care.
The Upper Tribunal's formulation
In HMRC v Hicks [2020] UKUT 12 (TCC), the Upper Tribunal confirmed:
"Whether acts or omissions are careless involves a factual assessment having regard to all the relevant circumstances of the case… the conduct of the individual taxpayer is to be assessed by reference to a prudent and reasonable taxpayer in his [position]."
In summary: reasonable care is a context-sensitive, objective standard — the behaviour of a prudent and reasonable person in the same position as the taxpayer, taking into account their individual abilities, experience, and circumstances. It does not demand perfection, but it does require genuine engagement with one's tax obligations.
Citation sources
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details. The law defines ‘careless’ as a failure to take reasonable care. The Courts are agreed that reasonable care can best be defined as the behaviour which is that of a prudent and reasonable person in the position of the person in question Failure to take reasonable care can be best explained in an extract taken from the FTT decision in HMRC v David Collis where Judge Berner s
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details. Where an inaccuracy in a document has been made despite the person having taken reasonable care to get things right, no penalty will be due. Examples of when a penalty would not be due include a view of a situation that a person reasonably believes is correct which is subsequently not upheld an arithmetical or transposition inaccuracy that is not so large either in absolut
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details. Not every inaccuracy will incur a penalty. A penalty is not due if a person takes reasonable care, see CH81120, to complete a document correctly, even if it later turns out to be wrong. See CH81080 where a person discovers this sort of inaccuracy after they have sent us the document. A person (P), see CH81040, may be charged a penalty where they give us, see CH81050, an in
rely on the extended six year time limit under section 36(1) unless the person had failed to take reasonable care to avoid the loss and are not able to rely on the 20 year time limit under section 36(1A) if the person had a reasonable excuse for not notifying their liability to income tax. Meaning of reasonable care 55. HMRC’s guidance on careless inaccuracy in Compliance Handbook CH81120 states: “Every person must take reasonable care, but ‘reasonable care’ cannot be identified without consider
viser on what actions were required by the group to comply with the corporate interest restriction legislation. The group was advised that it was correct to file a single return for a worldwide group, including all the members of all of the subgroups. This advice proved to be incorrect. Here the reporting company (or a person acting on its behalf) had taken reasonable steps to ensure accuracy by seeking advice from a suitably qualified adviser. This should be the case even if the advice was that
is equally clear that for whatever reason, he was badly let down by Mr Smith who failed to submit the appellant’s tax returns on a timely basis. 23. Without more, therefore, we would have found that the appellant had a reasonable excuse. 24. The difficulty for the appellant, however, is the statutory exclusion set out in paragraph 23(2)(b) of Schedule 55. 25. The relevant statutory provision reads as follows: “23(1) Liability to a penalty… does not arise in relation to a failure to make a return
HMRC recognises that due to the international nature of many firms, and the complexity of underlying fund structures, the information necessary to accurately report carried interest may not always be readily available despite the fund manager’s best efforts to obtain it. This does not alter the statutory obligation on a UK tax resident individual to account for the correct amount of UK tax treatment on any carried interest they receive – if HMRC suspects the right amount of tax has not been paid
rs (but within six years) from their respective end dates. Accordingly, the assessments for tax years 2014/15, 2015/16, and 2016/17 were invalid unless Mr Brown had failed to take reasonable care to avoid not paying the HICBC (s36(1) TMA) or did not have a reasonable excuse for failing to notify HMRC that he was liable to pay HICBC (s36(1A) TMA). Careless behaviour 69. HMRC’s guidance on careless inaccuracy its Handbook at CH81120 states: Every person must take reasonable care, but ‘reasonable c
EM5182 makes it clear that even though an agent is employed we always in the first instance look to attach the responsibility for the error in the return to the taxpayer. The taxpayer has a personal duty to ensure that the return is correct. Although an agent may have prepared the return and computations this doesn’t diminish that personal responsibility. Because the test of culpability is carelessness on the part of the taxpayer you need to ascertain what reasonable care the taxpayer has failed