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What is reasonable care?
There is no statutory definition of reasonable care, although it has been widely discussed in case law. HMRC released guidance on reasonable care in respect of tax returns and other documents in February 2018.
HMRC will generally take individual circumstances into account when considering whether reasonable care has been exercised. Best practice will be for clients to keep records of their reasons on how they came to a particular decision. The guidance also says that if taxpayers aren’t sure about anything, they should ask HMRC or a tax adviser.
The guidance goes onto say:
“If you’ve used a tax adviser with the appropriate expertise, HMRC would normally consider this as having taken reasonable care, unless it’s classed as disqualified advice.”